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  5. Hi John Sir

    In the part c of example 6 while calculating the market value in two years time, can’t we calculate it with this formula Po=Do(1+g)/(Ke-g). Taking Do=20 and growing it at 2 years compound rate of g i.e 6.75%, Ke=14.375% and g=6.75% But the answer is different in this case.
    Please explain!

      • Can’t the formula be used directly? Please clarify.

        P (after 2 yrs) = [ 20c x ( 1+g)^2 ] / re – g

        We get the answer 299 c.

        But when we put (1+g) ^ 3 then we get the correct answer 319 c.

        I know the short and easy method is to just multiply the correct M.V into the growth rate squared for number of years, but it’s bugging me why the Po formula isn’t working.

        Thanks

        Yahya

      • Normally when we use the formula, the numerator is Do (1+ g), which is the dividend in 1 years time. The answer is then the MV now.

        If you want the PV after 2 years, (which is 2 years later than ‘now’) then the numerator needs to be 2 years later as well – i.e. the dividend in 3 years time, which is the dividend in 2 years time x (1+g)

    • In other words we can say that the M.V now ‘depends on’ or takes into account the future growth of dividends for at least 1 YEAR (expectation of shareholders).

      Well explained! It’s as if you’ve just wiped the cobwebs in my mind and shone a light. Enlightening plus lightening(the burden) and lightens(cheers up) indeeeed!!!

      I not only wish to learn and understand ACCA but also the art and skill of teaching which you’ve been blessed with, so that I can share and guide others and help them understand.
      The glow which comes in the eyes of the listener/student when you’ve explained something properly is a gift in itself. 馃檪

      • My question is almost similar to “accastudentofoman” question.

        I dont think that using the dividend growth rate to find the share price after 2 years is correct.

        and I believe using the (reformed) cost of equity formula would give us a more relevant answer.

        what do you think @opentuition tutor ?

      • Using the dividend growth rate as I have done in the lecture is certainly correct!!

        I cant really add anything to what I say in the lecture, and what I have written here in my previous replies.

        There is no such thing as a ‘reformed cost of equity formula’. You use the dividend valuation formula (‘the growth model’) that is given on the formula sheet, and that is what I have done.

  6. Hi Mr. John

    I attempted F9 for June 2016 and hope would clear this time. As P4 is advanced level of F9, I am planning to sit for P4 along with F6 for September session. I have also F7, F8 and all Ps to clear and I would like to ask you can I sit for P4 before clearing above papers.

    Regards

  7. Hello Mr. John,

    It’s been always great and highly useful whenever I listened to your lectures. I had used your resources in retake when I failed in F9 in the first attempt when I self-studied. It was awesome and that alone enabled me to understand F9 topics and get a pass. Now, I would like start my P4 for Sep 2016 session. Can I use the same opentuition resources of Jun 2016 to prepare for Sep 2016 please? Or, are you going to make available the latest one shortly please?

    Many thanks indeed Mr. John and your team.
    God bless you and full team.

  8. Hi there,
    I passed P1 in my first attempt. The credit goes to the excellent teacher Mr John. His teaching is really great. I would like to give many thanks to him for this excellent service for free.

    Can I ask to the opentution administration where are the previous video lectures upto chapter 7 of P4?
    The video lectures start I can see starting from chapter 7.
    Please let me know if it is possible to watch other videos as I am eagerly dependent on from Johns lectures from the beginning.

    Many thanks

    • It is Mike who teaches P1 – not me 馃檪

      There are no lectures for the first seven chapters – they are for you to read yourself and are a combination of background reading and revision of earlier papers.

      • Oh Sorry, I mistakenly wrote John rather I actually meant Mike.
        Apologies please.
        Thanks to let me know about the videos John.

  9. Oh dear Mr.John, I missed you so much since F9 馃檪
    So nice to have so great teachers during life! You inspire, make hard things understandable, and prepare people for life of finance. 馃檪
    Thank you for sharing knowledge.

  10. hi sir,
    i am currently using CASIO Scientific calculator fx 100MS. The answers for all the examples are as per your calculation shown in the lecture but for example 4 to calculate average rate of growth i cannot get the right answer as i think i am making mistake in typing it in calculator . So can you pls tell how to input it into the calculator.
    A very helpful lecture 馃檪
    Regards,

  13. Hello sir
    I had your lecture. . It was really good, easy to understand…
    It cleared all my questions regarding this topic specially for growth rate. .
    My next topic is mergers and acquisition, but I think they aren’t available at your topic list.

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