March 11, 2016 at 9:42 am
opentuition_teamKeymasterMarch 11, 2016 at 1:07 pm
P4 abit fair let me keep my fingers crossedMarch 11, 2016 at 2:25 pm
In q1…..I got less than 40million cash flow,From operating profit I add depreciation and then deduct all investments and lastly interest of 5% on bonds….than I add dividend received n deduct additional withholding tax ….total of above all divided by number of share…this is what I have done.
In currency option…I think we shld not exercise… But anyways I showd the calculation …which seems quite odd (to be honest)……question 4 no idea how to get PA….I just divide npv with cost of capital n got call option of -3.86, question 2 was OK …got Marginal +npv n than I calculated the financing impact…I ignored that interest treatment of long term loan,which say interest will b on balancing figure……Now guys…what u say, what are my chances 🙂March 11, 2016 at 2:33 pm
Was it a call option on dollars?March 11, 2016 at 2:38 pm
Yes it was a call option on dollarMarch 11, 2016 at 2:49 pm
Is it put option? Because is an option to sell euro receiptMarch 11, 2016 at 2:50 pm
Does anyone remember the questions and mark allocation for Q1?March 11, 2016 at 2:50 pm
For me q4 pa=15 pe=15 because npv=0 can anyone confirm these?March 11, 2016 at 2:51 pm
No call because the contract was quoted in dollars and we were buying dollars. Selling euro. Call optionMarch 11, 2016 at 2:53 pm
HOw much mark will they deduct if i use put option?
I havr never encounter this kind of question in past year..this paper p4 is so trickyMarch 11, 2016 at 2:54 pm
Yes it was fair, I forgot interest deduction. Also made it put option. But the lucky escape for me is q4. This example was done in bpp book and I actually remembered it with out much understanding. Pa was 15 m discounted at coc for three years. I actually did that question in last half hour. Short scenario was advantage. Messed up with apv question. But still completed with alot of asumptions. As I got this new exam technique of assumptions in this attempt. Left 20 marks straight bcz of time constraint. I hope I will pass this time around INSHALLAHMarch 11, 2016 at 3:00 pm
which question u left unattempt?
I choose 2 and 4 as optional and so far i discovered myself make quite few mistake
I din even know how to do 2bMarch 11, 2016 at 3:03 pm
I dnt know how much professional marks i will get. Knew nothing about briefing paper. That was unfair 🙁March 11, 2016 at 3:12 pm
Sir john I have an idea to make ur poll more interesting. Mostly we attempt paper in higher 70s or early 80s. But upon polling it gets count with 90 plus. It will b of more interest if u divide poll by 70 to 85 and 85 to 100. What is other guys take on this?March 11, 2016 at 3:17 pm
You are correct on that one , otherwise that poll is not a true representative of the actual facts.March 11, 2016 at 3:19 pm
Call option mate .March 11, 2016 at 3:28 pm
Yeah, it is a call option. Can’t remember what I did in exam. Does anybody remember, the premiums given on the left were premiums for call or put?March 11, 2016 at 3:38 pm
a very time pressured paper really, i attempted question 1 2 and 4. question one was okay did the dividend capacity normally, calculated the lock in rate and chose call options and did the forward rate wrote down explanations fine i think. the discussion paper was a surprise though did it like a report but changed the title.
question 2 i thought the apv was a fair one but mistakenly forgot the fixed cost out and the government subsidy was a bit confusing.
question 4 no idea wat the Pa was just put zero and made an assumption but i read the article and wrote sound assumptions. gues 10 marks for assumptions.
b, had no idea what rho was just wrote about interest rate risk
c was general knowlege on world bank and IDA
hoping for a pass atleast in sha allahMarch 11, 2016 at 4:16 pm
a) dividend capacity was approximately USD 24 mln.
b) i have used call option and bought futures (both June contracts), effective rate was 1.1605. Contract size 138. (receipt USD 17mln)
c) dividend growth was without project 6% and company value USD 536 mln, as I remember. With new project i got higher value, so new investment project should be undertaken.
Q2. Base case NPV – Discount cash flows using all-equity financed dis.rate (I have used given asset beta, no need of ungearing);
Financial side effect – 1. tax shield on debt 18*0.06*0.25, discounted by risk free rate -3.5%, years (2,3,4,5 – as tax is payable in the following year)
2. subsidy effect 8*0.08%*0.75 , discounted by risk free rate -3.5%, years (2,3,4,5 – as tax is payable in the following year)
3. tax shield on subsidy loan 8* (libor-0.08)%*0.25 ,discounted by risk free rate -3.5%, years (2,3,4,5 – as tax is payable in the following year)
Right issue- nothing
Issue costs – (18+8)/0.99*0.01=0.26
Call option – P(e) – 15 mln, Pa – i assumed that npv of expansion of production would be 0+1.41(negative npv figure given), and undiscounted it using 12% to get to the 3rd year. Options rho is the measure of interest rate changes.March 11, 2016 at 4:26 pm
Ahmed Bashir ChaudhryParticipant
I chose put option as you need to see what are you selling or buying againt dollar
Every currency trades against dollar
But thn again im not too sure as contect size was given in dollarsMarch 11, 2016 at 4:39 pm
Sorry, tax shield on debt was calculated on reducing loan balanace (4.5 mln payment each year)March 11, 2016 at 4:40 pm
For me q4 pa=15 pe=15 because npv=0 can anyone confirm these?
Yes! I used the same numbers as you!March 11, 2016 at 4:50 pm
Anyone remember the mark allocation for Q1, Q2 and Q4?March 11, 2016 at 4:53 pm
Q4 was 16, 5 and 4
Q2 was 18 and 7
Q1 was 6, 9, 14, 8, 9 and 4 professional marksMarch 11, 2016 at 4:57 pm
For Q4 i used 15m as both Pa and Pe as the NPV was zero. But discounted both down at 3 years at 12%….think I got 10.68m for both?
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