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For what seemed to be straight forward questions I think it was a shame not to have done well.
Panic city.
Did anyone get the equity value of the target to be 1,556m?
And was the combined equity value lower than the equity value of the main firm?
Best
Also my APV was negative both before the finance impacts and after. As losses were around 50m in the first two periods, they more than absorbed all subsequent profits… I.e. i had a zero tax bill for the whole project.
Anyone else?
Thanks
hello has anyone ever passed acca professional paper without completing the exam. I mean I only wrote 75% of the paper and left the other option question unattended. only did question 1 and 4 thoroughly. The exam was fair, only time was my biggest enemy.
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This is fair P4 exam and should be the standard. The only challenge should be time management. I wasted valuable time on areas I knew and didn’t utilize time allocation properly. My combined value for both companies (Forroso and Chipeke) was $14,551m. Also my synergy (additional value) was negative and not beneficial. Don’t know if I’m right. Question 1 was fairly easy. One could go a good shot at all the questions, but I did it last so I had to spot questions where I felt I needed to earn more marks. I just hope the approach was right. I did question 3 and 4 as optional.
Anyone calculated WACC for APV in second question? how did you do it?
were anyone able to regear beta equity that ungeared from Harmony beta (or dont know what was the name of the company at the end)??
about questions. What I remember were:
1. a) switch from organic growth to acquisition. directors discussing how to acquire new entities. the same industry or new industries? or the same industry but new companies.
b) option pricing
c) i) equity value of acquired entity
ii) equity value of combined entity
iii) discussion about calculations
d) explanation of terms like: mandatory bid, equal treatment of shareholders, poison pil, crown jewelery when defending against takeover bid.2. Adjusted NPV calculation 17 points and b. specific discussion (dont remember)
3. Black scholes,
4. a) Forex Hedge VS money market hedge (9 points) multinational holding company, netting of payables receivable against group companies. (7 point calculation and 3 point discussion)
c. Transfer pricing.I got equity value of the target company something between 1500 and 1600. Combined equity was greater than the one of the acquirer.
APV was positive and it was some substantial value . I think i had taxes in year 3 and 4.@zero0 said:
Anyone calculated WACC for APV in second question? how did you do it?I use M&M proposition 2 formula as they had given you the regeared equity and you needed to find the ungeared cost of equity, ke^i using
Ke= ke^i + (1-T)(Ke^i-Kd)Vd/Ve and then discounted via that for the base case NPV.Just calculated ungeared cost of equity from MM formula . For that calculated values for equity and debt first. And then used that to discount cash flows.
Q1 – I cannot remember the exact numbers I got, but the value created was definitely positive. Sure there was perpentuity when valuating Foroso (or whatever that was) and also perpentuity in combined companies.
Q 2 – I got a positive NPV and a positive APV. I got a balancing charge after depreciation of the machinery – was that in question 1 or 2?? I cannot remember anymore 🙁
I did Q4 – I did not even look at Q3. Q4 was not too bad, but the futures….my brain stopped working so I know I did not do well in this part. Multilateral netting was ok, also the advantages were quite easy. Money market hedge was easy enough.
Overall fair questions, but not enough time. I attempted about 90% of the paper, but the question is….were the answers correct enough to get me a pass?@samirrules said:
I use M&M proposition 2 formula as they had given you the regeared equity and you needed to find the ungeared cost of equity, ke^i using
Ke= ke^i + (1-T)(Ke^i-Kd)Vd/Ve and then discounted via that for the base case NPV.same here, I used the same formula
Thanks a lot samirrules, I had ungeared and then stucked 🙂 forgot about MM, so just used 13% in order to proceed with calculation
Do any of you guys remember what cost of equity you got using MM for the APV calculation?
@simsima786 said:
Do any of you guys remember what cost of equity you got using MM for the APV calculation?9% I think, seem to remember that number.
The exam was fair, the only problem… Bad time planning again… I cant get use to the strict time allocation and this was my third attempt
This is my 4th attempt at this paper and it seemed the easiest so far, but that could well be due to all the extra hours studying I’d put in. I just hope for a pass, this is my last exam,. I got 9% but it’s probably only worth 3 or 4 marks. Also I forgot to add depreciation back into which ever question it was we had to deduct it on. I left a couple of questions unanswered, couldn’t remember what a posion pill was.
In Q4, did anyone use the mid-spot in calculating the lock-in futures price? I think my brain was fried by the time I got to this point rushing to stay within my time allocation. I agree fair exam but we shall see. Good luck everybody
This is my 2nd attempt, and I have to say that it’s much easier than the previous one. However, time management is always a problem. I tried to answer all, but not enough time to complete, not even to look back to recheck what I had done. I just hope I did enough to pass. It seems that it is a fair exam to everyone. I guess the examiner must be stricter in giving marks, so that the pass rate should be around 30% as usual, is it right?
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This is my 4th attempt n last paper, agree paper is easy this time. Hopefully can gain pass mark to end my acca life.
Q1 my combined company equity value greater than both individual company equity value, even after deduct the purchase premium still added value to Chikepe shh. Anyone remember what wacc to use for the combined company? Mine like 8.84 but seems like not correct for this.
Q2 my npv with -952m n financing effect with positive value end up app with positive amount. Using MM formulae n get 9% too. N financing part I’m using 5%
Q4 Qs seems easy but my futures answer like better than money market answer anyone get this too? How u guys get 4mths spot rate? I think I will lose some marks here, cause I’m getting the same rate for the close up futures price n spot rate. Multilateral netting is easy too. I’m using mid point to calculate the amount into CHF currency.
This is all I can remember. Good luck everyone.
I thought Q1 seemed too easy so I am sure I didn’t do it right!! Question 2 I left until last and ran out of time – I’m so mad with myself as I spent too long on q4 with the blasted futures!! I HATE foreign exchange ? I hope I pass – my final ACCA exam and 2nd attempt. I’m so over it now.
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Can anyone remember the marks allocated for q1 on the mandatory bid,crown jewel and poison pills?
And the equity value was it to calculate the FCF value and multiple by the debt equity ratio (40%) to arrive as equity value??
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