[adurich]

Thanks to Almighty Lord.. I passed exactly on 50 on second attempt .last time I got 44…really am so happy .congrates to everyone who did it .and for those who didn’t .want to say try once more I m sure u will make it as I made it too ..last time I was losing hopes but reading these posts to wish I could write I m pass .but finally I passed .so please don’t give up.thanks open tuition .sir john moffat .bpp..and other online helps that I took !! I was self study student through out my ACCA .
Finally ACCA affiliate

[adurich]

How many marks I lose if I said buy futures now sell later ????

It was sell futures

The multiplying and dividing confused me

All the time we are always dividing with spot rate and contract size to get no of contracts ….but in here there was no need to divide by spot …the contract and transaction both were in eur!!

And my all calculation turned to loss due to above strategy I was doing

[adurich]

Future rate ..
The basis was 0.57 …I got futures as 124.5 something and it was creating loss

[adurich]

Pathetic exam
Qs1: currency forwards futures and options
Additional debt required and which strategy gives highest net payment
Other part ! Npv with international investment ! Hell no exchange spot rate given ..I just assumed that airone exchange spot is same as with Euro and continued ..lot of mess in Q’s 1 .got 640 contracts …and gain of like 10061 ..and lots of zeroes ..so I got confused that is my answer going in billions or millions …so messy work ..also qs1 involved multiplying the currency to get exchange answers and I kept dividing ..coz usual practice questions …then cancelled all and did again

Qs2..ration and trends 20 marks and behavior finance 5 marks
Due to Q’s 1 …I didn’t do qs2 well ..as I thought I could do ratios quick ..but qs1 was out of my imagination!!!!

Qs3..equity value of combining companies ..some multiple given ..I multiplied 8 with 6.50 to get selorne equity ….no interest were given ..figures were not as I practiced the whole kit …very few numbers provided with a long scenario…..Q’s 3 also asked about if cash was considered for the bid ..to what amount it is needed ..for some sources of finance ..which one is better as source of finance ( rights issue …long term debt …mezzanine debt …convertible loan) ..

As compared to June attempt this was tough …as there was no choice .the paper I expected would b straight enough to understand but this included no choice plus lot of complexities and the numbers were big ….so big in millions and after multiplying they were overlapping the other years figures ….messs

[adurich]

Thank u sir

[adurich]

Looking forward to your kind response

[adurich]

Looking forward to your kind response

[adurich]

Surely ..

Thank u

[adurich]

Could u please put them simplified

Thanku

[adurich]

Thank u for ur kind response

I tried the code but ..due to frequent internet connection disruptions ..I left in middle .

[adurich]

To add on the June futures is already given as 0.6964

It is the spot rate it’s given as 1.433

And when the answer finds the basis difference they compare 0.6964 and 1/1.433 ….I do not understand why they do 1/1.433 !! In any of us in bpp kit this is the only answer it’s done 1/1.433 ..is it because there is one month in between as the rate 1.433 is two month forward rate ..

[adurich]

I am too nervous now as I have missed lot of information to be included ..and also I left some 20 marks straight due to time was up as I couldn’t finish my paper ..

I really don’t know what is going to b the mark allocation

[adurich]

Was there any 40 basis points ?? I don’t think so as I remember …they gave us limits that it won’t go above 5% and below 3.4%

And then in requirement it said if the interest rate increase by 0.6 % and decrease by this %?

Because I didn’t do 40 basis as I think it was not there

[adurich]

Is there anybody who fully completed the paper ??

As I didn’t !! I left 19 marks straight

[adurich]

Yes absolutely the qs 1 was totally based on acca technical article
Investment appraise and use of real options

Fully adapted from that

[adurich]

No the option was to delay ..the question said it ..so it was call option .

[adurich]

Capital allowance was on 25% reducing balance machinery

What I did was

25% of 120000=30000
90*25%=22.5
67.5*25%=16.875
50.625

In the last year I took the whole 50.625 and applied tax rate as the qs said that the capital allowance would be left zero at the end of phase2 ( 4 yrs)

[adurich]

Before the report it was 5 marks to discuss use of real options build on Npv

[adurich]

My Npv phase one was negative …with option not delayed

And if delayed I found positive npv ….so I suggested that real options are better as they take risk and rewards as opportunities and evaluate those risks using such options by bsop bla bla and assumptions ..I took away all my time …please someone also left some or completed whole paper

[adurich]

Well I used same discount factor 12% on phase one ..

But also I assume the market return as it was not given..so I assumed it be 10% …so when I wasted much time calculating I realised that it would be around 12% anyway ….so I just assumed that examiner wants us to use the same project specific discount rate as this is the only project asked about ..but phase one only !!

Well these are my own thinking and assuption I m not saying these are correct but I assumed things alot ..so that I could move on in the paper .so much time pressure ..I also did not complete one optional question which was qs 2

So I really don’t know but I enjoyed doing the paper !!

[adurich]

Yeah I actually did 49 contracts but ..I mixed the period of loan and hedging risk period which was 6 ..so I cancelled 49 and put 42 instead ….ahhhhhh I m feeling so sad now

[adurich]

So I put 42 contracts …but I m afraid how much will I lose

[adurich]

For heding I did calculated 49 contracts ..based length of time which was 7 months so 7/ 3 * 105000000/500000

But suddenly I changed it to 6/3 because I realise that heding risk is only for 6 months 1 June to 1 Dec

I don’t know how much I will score or lose

[adurich]

For qs one I used the same all equity cost of equity ..because I made an assumption that project e phase one is financed by equity only as similar company cost of equity ungeared was given ….

Also then for phase two I separated did caclution where I used cost of debt for investment to be discounted and ..annuity facot for 10 years to discount back at 12% .which was given

I don’t know overall opinion of all .and I know it’s not all correct but I made few assumptions let’s c .how it comes out to be

[adurich]

Thank u Patrick

And for combined geared beta it is

Combined geared beta= combined asset beta ( ve/ ve+ vd(1-t) ?? Correct or it should be inverse ..please confirm the numerator n denominator here

[Author]

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