[elomi]

I passed P4 with 59%. I am now an Affliate.

[elomi]

Dear Robert,

In Examination Question Option to Delay or Expand are called Call Options and Option to Redeploy or Withdraw (meaning terminating the project) are called Put Options.

I do hope your Question is answered.

Mohammed.

[elomi]

Dear Stell,

Your choice of Option Papers at ACCA will purely revolved round the following:
1) Your career aspiration or your current responsibility if you are gainfully employed.
2) Your performance at Skill level papers. At Skill level papers F5 is a foundation paper for P5 and F9 is a foundation paper for P4, therefore, your performance at the level of F5 and F9 will equally be of great influence towards the option paper choice between P4 and P5.
3) The nature of your employer. For example if you are working in a manufacturing company I will advice you go for P5 but if you are in the financial institution, I will definitely advice you to take P4.

Currently I have only one paper to finish ACCA and my choice of Option papers are P4 and P7. Although, I have passed P7 and sat for P4 in the December 2015 exams.

Thanks and best regards

Elomi

[elomi]

Dear Faniacca,

There reason is very simple. May be the Free Cash Flow from year 2 will increase by 5.2% into infinity and the the cost of capital is 10. There to get the value of the cash flow now the Free Cash Flow at year 2 will grow at 5.2% and you divide it by the cost of capital less the growth (5.2%) and multiply by the discount at the base year. In the question above the base year is year one.

This is you can understand from the valuation of share price with the growth from your F9.

Thanks and best regards.

Elomi, MT.

[elomi]

Dear Altaf88,

I passed P7 at second attempt and I want to share something very important with you which will be of great assistance toward your success in the paper:

1. Sound knowledge and application of Accounting Standards is very very vital to your success.
2. Always give reason of why you are doing what you are doing. For example, if you are carrying out test or gathering audit evidence mere mention of the evidence will not make you pass, you must support why such evidence is required.
3. P7 is purely a practical paper. Regurgitating of knowledge will never be of any assistance. Therefore, fair knowledge and application of audit standards is very very vital even though you are not required to mention the standard(s) but applying them in answering question is the way to go.
4. Answer the examiner’s question not what you want to answer. Therefore, pay attention to the quality of your answer rather than quantity.
5. Practice as many questions as possible from the pass question papers.
Finally, I do not advice you waiting for guesses or tips as to where and where the question will be set. Such technique will never assist you.

Thanks and best regards.

Mohammed Tetengi Elomi.

[elomi]

I have not look at the question you are talking about but the non payment of tax on remittable cash flows might be one of the following reasons:

1) Bilateral tax treaty:
If the rate of tax in Yilandwe is high than the tax rate in US the company will always pay the highest of the two tax rates. That is the tax treaty allow you to only pay higher of the two rates. for example, if in Yilandwe tax rate is 40% and in US is 30% the US company that invested in Yilandwe will not pay any tax on remittable cash flows given that they have paid high tax rate in Yilandwe. However, if Yilandwe tax rate is 30% and US is 40% the extra 10% tax will be paid on remittable cash flows.

2) Tax Allowable Depreciation:
Due carrying forward of losses as a result of tax allowable depreciation the company might not have tax charge but still have remittable cash flows.

Thanks

[elomi]

ACCA has stop publication of exam questions and answers on their website. The problem is that ACCA has moved from two examination sitting per year to four and publishing all the four examination questions and answers at every single sitting will required lots of storage facility hence they will chose when to publish and which exam Q&A they will publish. Note also that all the papers that are currently with Objectives will no longer be published by ACCA.

Given the above there is no site for now that you can get September 2015 Q&A.

Thanks and best regards.

M T Elomi

[elomi]

Hello,

What I got as Premium in USD is $17,219, $25,769 and $38,891. I calculated Premium as follows:

1.8800 = 19 x 31,250 = 593,750 x (2.96/100) = $17,219
1.9000 = 19 x 31,250 = 593,750 x (4.34/100) = $25,769
1.9200 = 19 x 31,250 = 593,750 x (6.55/100) = $38,891

Please, note that the Strike Price is in Cent hence the need to convert it by using 100 unit of Cents in $1.00.

Should you have any further questions please, you can email me at asmoh270@outlook.com.

Thanks and best regards.

Mohammed T. Elomi

[elomi]

Read Examiner’s Comment for June 2015 examination sitting. There you will be in a position access yourself because the examiner did mention why student fail P4 generally and also went ahead to come up with reasons why some students did well and pass their examination. Of particular interest in the examiner’s comment is that “route learning and question spotting will never help student to pass”.

I will advice that you really have knowledge of the entire syllabus and also possess ability to apply your knowledge in the examination room. To achieve this, revise, than practice, practice, practice. Do this in a real examination situation.

Thanks and best of luck.

[elomi]

It all depend on the paper you are sitting for. For example, BPP/Kaplan for P4 is still valid for December exams because the syllabus has not changed. Whatever paper you are considering you have to confirm that the syllabus are still the same because for example there is a new IFRS that will affect people sitting for P2 or P7 which is IFRS 9 Impairment of Financial Asset and Liability.

Thanks and best regards.

[elomi]

I am also writing P4 as my final paper and I believe you can join LSBF using Opentution as a support. It will work but you should know that P4 is need to be practiced very well. The lectures are just a guide, practice, practice and practice is the key to passing P4. I just passed P7 today.

Thanks and best regards.

[elomi]

Okay. Thanks.

[elomi]

Dear Sir,

Many thanks for your response. But the remaining study materials and lectures covers the September 2015 exam syllabus requirements?

Many thanks and best regards

Mohammed T. Elomi

[elomi]

Doric the reason for deducting the 5% is because might be cost of debt and debt is tax deductible hence to arrive at the value of the company it must be deducted. Also, note that the value $473.3 is the Corporate Value and you have to deduct debt to get the Estimated Equity Value of the company.

Thanks and bye for now.

Mohammed T. Elomi

[elomi]

Foreign NPV:
Technically this is the same with home NPV only certain things need to be taken into consideration which are as follows:
1) Exchange Rate: You need to convert the foreign currency into the home currency at a certain point of your analysis. This is because the investors or shareholders whom the analysis is been made for are home based and will only understand the impact of the new project based on home currency.
2) Tax:
Where there is tax agreement between the two countries that is the home country and the foreign country where the investment will be undertaken you need to be aware of double taxation. If for example, the home country tax rate is 45% and the foreign country tax rate is 35% than after converting the resultant cash flows you will only charge the balance tax of 10% because at home front.
3) Certain Cash Flows:
Certain Cash flows like Royalty, Management Charges or Subsidy will need to be accounted for as an income as well as expenses. For example, if the foreign project in question will pay Royalty or Management Charges to the Parent Company at the foreign project point of view such cash flows are expenses while at the home or parent company point of view they are income. You will need to deduct such cash flows at the foreign investment appraisal but immediately after converting net cash flows into home currency you will need to translate the Royalty or Management Charges into home currency as an income.

This is what I can said about the Foreign NPV.

Now APV
The issue with Adjusted Present Value is that you need to separate the cash flows from operations from the cash flows from the financing. That is you first of all analyses the cash flows from operations using Ungeared cost of capital while you come back to analyses the financing cash flows using the financing cost or cost of debt as the case may be.

I do hope this little explanation will go a long way to assist you.

Thanks and best regards.

Mohammed T. Elomi

[elomi]

One thing I will want you to understand is the concept of Internal Rate of Return (IRR). This concept make some assumptions. IRR can also be used as a breakeven point for a project. The fact is that IRR makes assumption that the return on the investment will be reinvested at the company’s cost of capital.

Relate this assumption to the cost of redeemable debt you will agree with me that interest earned if not paid will be compounding. That is will be added to the principal and form basis of further interest charge which mean reinvestment assumption associated with IRR. Also, the redemption value will be repaid at the terminal end of the debt which is also a cash flow item and interest is tax deductible. Note also that Market Value of the debt will play a significant role in determining the cost of debt.

Given these three different cash flows (Market Value, Interest and Redemption Value) associated with the redeemable debt the only way to establish the cost of redeemable/convertible debt is to extrapolate using IRR.

I believe with this little explanation you will now be comfortable with the Cost of Redeemable Debt.

Thanks and best regards.

Mohammed T. Elomi

[elomi]

@Seyyo and Gabriel I am asking about the difficulty of Paper P4 because June 2015 will be my first attempt. Also, I have attempted P7 in December 2014 but failed with 48% so as for P7 I am fully aware of the level of difficult associated with it. I normally passed all the Professional level papers at a sitting only P7 could not be passed. So I needed someone who have attempted P4 and to let me know the level of difficult in it. Thanks.

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