*** December 2024 ACCA AFM exam – Instant Poll and comments ***

I got APV, Acquisition and Swap…

Acquisition question as a big blunder for me. Probably scored 5 marks out of 25 on that one!

I was not ready for swaps

My exam had first question with international NPV (can anyone tell me what they calculated, I had 4.something million positive?) and 10 marker re free trade, single market and customs union.
Second question was acquisition share per share offer: valuation and gain.
Third had interest rate hedging with collar. Disaster 🙁

The international npv was messy. Honestly too long of a question to do everything correct. Was I to translate the cashflows? I totally forgot which figures were in which currency. I calculated the spot rates for the currency at least. That free trade question was a kick in the guts, why would they test that? I feel like International npv wasn’t a big area so to have a 50 mark question on that was unnessary. Seems they try everything for you to fail. They seriously need to assess how much can be done in time allotted. I cant do good quality work for that 50 mark question and still 2 additional questions.

I remember the way I answered quite well but can’t guarantee I didn’t mess up cells/formula.
In CL currency I had revenue (units times unit price which was already inflated), minus variable costs (again units times cost per unit inflated at 20%), minus transfer price ($5 per unit inflated at home country inflation 3% and then translated in CL, but not sure this was to be included), minus fixed costs inflated at inflation rate, minus TAD (which i added back after calculating the tax). Tax at 25% on operating flows, TAD added back, working capital (incremental amount only), investment cost in year 1 and scrap value in year 4. That was it for the flows in CL I think.
I then translated at FX to dollars and added contribution, deducted fall on contribution for stopping exporting $0.5m annually (not sure that had to be accounted for either), added royalties and calculated tax at 20% on extra flows. Then added to remitted flows and calculated NPV at 13%.

Please let me know where I went wrong. Thank you

This was my last exam and I am so disheartened – I have sailed through ACCA up til now – never under 70 – and actually really enjoyed this syllabus. But this exam was a kicker. I really think I’ve failed and it’s a huge shock and embarrassment. I can usually tell within 5-10 marks how i’ve done, and this one, let’s just say it’s marginal at best.

I got customs unions etc and international NPV.
10 marks was a lot for a really specific knowledge area that was unlikely to be much covered as not related to calculations.

Then that NPV – I was really unclear what we were meant to do across the foreign and home currencies – which to include in which section. I started doing it all in the lira inc the royalties etc. Then realised the 2nd part of th question was about that, but didn’t have time to take these bits back to dollars. Really unsure how I’ll do as it was all a big mess and the 5 marks for dollar stuff will be hard to mark for me as all in the wrong currency.

Second was the acquisition thing. I got a really unlikely answer so who knows- I must have gone down the wrong track.

Third was the hedging. I had a nightmare with the hedges despite having it really down before, somehow it all went out the window. Didn’t get the collar at all so that’s 1/3 of those marks gone.

I just feel like it’s one of those exams where because they don’t guide you on how to do something, if you go down the wrong track you have potentially no marks at all.

Also really pushed for time – no time to ‘think through’ answers, so much to read, hard to find the information to use in so much text.

And then those professional marks seem a bonkers system- I have no idea how they award them when your answers are clearly so wrong.

Just realised that royalties had to be substracted as cost in sub in sub currency and added as income in home country. I just added them as income…so bad…hopefully I will not lose too many marks for that

@maria9186
Yes that’s exactly what I did too!
Original was share price times shares using the same P/E ratio.
Then combined shares after exchange was 1100, 300 issued to yekkon on top of the original 800. Can’t remember the results too well I think I said morexa had a gain of 4% wealth and yekkon 57% and EPS increased for Yekkon by 115% something like that. As combined earnings were 710 and shares 1100 giving EPS of 0.64/0.65 compared to original yekkon eps of 0.3
Also agree with Esther, the 10 marks on trade practices was insane!
With NPV I had the CFs in CL first – revenue minus processor cost, variable cost, royalties, tad, tax loss carried over, add back tad, minus investment and add residual, minus WC and then convert to home currency, minus contribution and royalties income and tax those at home rate then discount it, i didn’t add deduct thr 0.5m I think that might have been the wrong decision.
This was my last exam too, think it was the hardest syllabus of the entire thing.

Hey , did how was the hedging question, other than collars anything else like futures options FRA or only collar? I mean in the set which got INt NPV question. And about the valuation qn in that set any similar model qn in kit or prev yr paper?

Is anyone remembering how many marks were in the competition authority question or how the split of marks was in question 2?

@maria9186

10 points for pre- acquisition figures
10 points for post – acquisition
5 points for authority

@ can you please share your thoughts about the student tasks in question 3 (particularly the one with forward to hedge unhedged exposure from option – I think, it is not possible, because don’t know which direction the underlying security price will move), and how according to you will be split the points from the first part of hedge question.

Probably:

5 points for collar
4 points futures
4 points basis
2 points advise which one is best

Does anyone remember the breakdown of APV Q1, the electric vans one?