[cfelicepace]

PASSED! ACCA done and dusted and i can have my life back. But no theory worked for me so have spent the past week worrying needlessly! To all those future finalists best of luck but don’t waste time on these theories as in my case all was proved false.

[cfelicepace]

I feel the same way! Was putting an average of 4 hrs a day ever since January and had worked all questions since 2008 some twice or 3 times… gutted… horrible paper.

[cfelicepace]

Thank you both for your input on this question. However, I’m not working from an outdated revision kit. It’s the past paper answer I’m looking at! So, I’d really appreciate your input on the correct reasoning of this treatment.

[cfelicepace]

Considering that F9 has such a vast syllabus, I found it quite unfair to be asked to calculate MV or Cost of redeemable loan notes three times in the paper, then barely any questions on working capital…. no modigliani and miller or capital structure theories either… or business valuations except 1 mcq on earnings yield …… so much material to be asked so little …

Kept hearing Mr Moffat’s voice while doing WACC calculation 🙂 🙂 Thanks so much for your lectures.

Let’s hope for the best!

[cfelicepace]

Thanks 🙂

[cfelicepace]

Hi

I’ve watched this lecture and it’s great. One question though:

Why aren’t interest payments included as part of the evaluation of the buying decision? Wouldn’t this be a cost of purchasing the machine too?

Thank you for your time 🙂

[cfelicepace]

Hi John,

I’ve worked this question and found the cost of equity of 12%. Then tried to discount the future dividends at the disc factor of 12%, but my values don’t agree with the answer.

I am taking dividends of time 2 = 500 x df 12% x 2 years 0.797 = 398.5 million
dividends of time 3 = 1000 x df 12% x 3 years 0.712 = 712 million

total present value of future dividends = 398.5+712 = 1110.5 million

Why does the answer continue by taking the market value at year 3 (discounted) and adds it to the total of the present values of the future dividends?

Thank you for your help 🙂

[cfelicepace]

thanks John 🙂 I understand. Just like the mv of the equity is the pv of future dividends, so is the mv of the debt.

[cfelicepace]

thank you for the clarification 🙂

[cfelicepace]

looking at it again, I get 4.20 if I use this year’s share dividend of 32c in the answer rather than the 33.6c, which probably makes more sense since we require the current market price of the shares.

If my understanding is correct, why does the past paper answer use the 33.6c?

[cfelicepace]

Hi John,

Tried to find an old thread regarding F9 Dec 2014 multiple choice question 19, but was not successful. So here goes:

This is the question:
A company has just paid an ordinary share dividend of 32.0c and is expected to pay a dividend of 33.6c in one year’s time. The company has a cost of equity of 13%. What is the market price of the company’s shares on an ex div basis?

My answer:
1. found growth rate of 5% (33.6-32)32
2. Po = Do(1+g) / (Re-g)
= 33.6(1+.05) / (0.13-.0.05)
= 4.41

Answer is (D) = 4.20
Dividend growth rate = 5%
MV = 33.6/(0.13-0.05) = 4.20

Why was the growth rate omitted from the numerator in the formula?

Thanks

[cfelicepace]

Passed – first attempt. I also find the Becker exam questions very good in addition to working all the ACCA past papers.

Thank you once again Open Tuition!

[cfelicepace]

Feeling good this morning! Thanks so much Mr Moffat…. did F5 in one month with Open Tuition and passed well first time round.

Open tuition – THE BEST 🙂

[cfelicepace]

Thank you so much for everything.

[cfelicepace]

thanks for this. I understand.

[cfelicepace]

ok. got it.

thanks a lot.

[cfelicepace]

I compared absolute figures without looking at relatives. I was also detracted by something I read where market share is the same calculation as sales volume.

Thank you for the explanation.

[cfelicepace]

It’s a sample copy from the Becker site itself – not a pirate copy. It is not a full copy but provides a taster of what it has to offer. hence the reason why it doesn’t have answers.

[cfelicepace]

Thanks a lot.

However the 113 is the total cost not the variable cost. The 113 includes the Fixed cost.
Mr Moffat an you help please?

thanks!

[cfelicepace]

Thanks for the answer. I am working on an online revision kit that I found which unfortunately does not have the answers.

With respect to this question, the spare capacity is 4000 over the 3 months. My understanding is that the customer wants 3000 per month, which means that there will not be enough. If this is the case, wouldn’t it make sense to charge the customer the full selling price?

[cfelicepace]

Thought so! Thanks again!

[cfelicepace]

Q280 Biscuits and cakes. pg 75-76 – BPP Revision Kit

Qd asks for a recalculation of expected annualised ROI and RI after adjusting for a new investment.

When working it out, I calculated the depreciation for the year and deducted from the profit. I also deducted this depreciation from the net assets to complete the double entry.

However, the answer in the book deducts the depn only from the net profit and leaves the capital employed at full cost.

Can you explain what I’m doing wrong please?

Thanks again.
Claire

[cfelicepace]

Good morning Mr Moffat,

Q276 of BPP’s revision kit (pg74):

Box Co has an operating profit of $2000 and operating assets of $95000. The cost of capital is 12%. There is a proposed investment of $10000 which will increase operating profit by $1400.

What is the RI with and without the proposed investment?

While I found no difficulty in working ROI and RI, the answer on pg156 shows a calculation of 850 depn. I’d like to know how this calculation came about.

Thank you.
Claire

[cfelicepace]

That’s a relief! believe me for a minute I thought I was going crazy!!!

[cfelicepace]

I followed your same reasoning in arriving at the answer. However, The answer for Q103 shows that the minimax regrets for each were added! Hence my confusion… Would love to send you a pic of the answer if this was possible!

Anyhow, thanks as always 🙂

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