[eshon5]

Hi alemodique,

Yes, you are right it should be higher, now i don’t remember how i got 106.7 or it could be 109.7, but definitely you are correct.

[eshon5]

Hi everyone,

I did as follow as I remember:
Q1 b i)
Current bond value 107.8
Coupon rate 5.2
New value 106.7
Coupon rate 5.57 (5.2+0.37)

5.2/1.1+5.2/1.1^2+105.2/1.1^3=88.06

5.2/1.02+5.2/1.02^2+105.2/1.02^3=109.22

Irr= 2+((109/(109-88))×8=2.47

ii)

Gov rate y1 y2 y3 y4 y5
2.2 2.3 2.4 2.7 2.9 estimate
BBB. .4. .6 .8 .9 1.1estimate
Total. 2.6 2.9 3.2 3.6 4.0

5.57 5.57 …………105.57
1.026 1.029^2… 1.04^5
4.40 4.30 ………. 87.18
(4.4+4.3×2+….+87.18)/105.57=4.7 years

Gov rate y1 y2 y3 y4 y5
2.2 2.3 2.4 2.7 2.9 estimate
A. .3 .5 .7 .6 .9estimate
Total. 2.5 2.8 3.1 3.3 3.8

5.57 5.57 …………105.57
1.025 1.028^2… 1.038^5
4.5 4.4 ………. 91.2
(4.5+4.4×2+….+91.2)/107=4.5 years

I used here for Gov yield and A BBB spread just estimated as I can’t remember but what I remember it was 4.7 years and used face value in first duration and 4.5 years and used MV

I am just shocked as examiner really grilled me buy makeing thinks very complicated for easy topics

Wish all of you a pass mark

[eshon5]

q1) decision tree
a) go ahead with expanding as overall ev was 585 after deducting capital cost of 360 compare to not expanding was 420
b)to get max price need to calcuate ev with perfect information less ev without perfect info from part (a) which was about 184

q2) was wholly discursive

q3) revised life cost per unit

material 7.20+14.40 = 21.40
labour =10.60
warranty = 1.8
something else = xxx
total mc was about = 65.xxx or 67

extra unchanged cost =60

expexted selling cost was 192 compare average market price of 150 so it was suitable to use market skiiming price for com

Q4) variance analysis was easy as component 1 planning was fav and operational was fab and comp 2&3 vice versa, generally performance of business was good as well purchasing managers cos overall mix and quantity was favourable due to more use of quality product which help boost of sales quantity

Q5) revised budget was deficit of around 87000 and it was advisable to use zbb for newtown school.

[eshon5]

so, guys, as far as i remember:
Q1,
(w2) at aqc and at sfp
osc 20000 20000
r.e. 2000 8000
fva (3000) (3000)
dep 500
loss (2000)
i cant remember 700
17000 26200

post acq profit was 9200

(w3) goodwill
cost of inv
2000×75%x2/5×2 12000
loan 15000/1000×100 1500
fv of nci 2500×2.4 6000
less (w2) (17000)
goodwill 2500

(w4) nci

from w3 6000
25% x 9200 2300
9300

w5 g.r.e
px100% xxxxx
75%x 9200 6900
pup (600)
loss on invest (400)

also
invetment adj P(400) and S300
receivables inter-Co (3700)
bank C-I-T 900
payables inter-Co (2800)

Q2
workings
(w1) Dr Revenue 10000
Cr Loan NCL 10000
Dr Cl Inventory 7000 CL
Cr inventory 7000 COS
W2)
Dr Held-for-sale 4200 SFP
Cr plant 4000 SFP
Cr Other income 200 IS

Dep`n building 2500
plant 7000 (63000×20%x6/12)
plant 5900 (59000×20%x6/12)

W3) Dr Admin exp 100 (revenue x 1%)
cr provision 100

w4) cy tax AAA def tax bf XXX SFP: NCL def tax DDD
overprov (xxx) CL tax liability AAA
def tran BBB —————— BBB IS: tax expense CCC
TAX exp CCC def tax cf DDD

w5) OSC 25000 x 0.50 12,500
SP 25000 x 0.70 17,500

w6) Fin Cost: bank interest 500
loan interest xxxx

w7) NCA: land&building NBV 44,500
plant 53,100
Fin lease xxxxxxx
NCL: def tax xxxx
fin lease xxxx

CL: BANK xxxx
tax xxxx
int accrued xxxx
mainly these

Q3) overall IS and SFP was good compare last year due to revaluation as ROCE need to be calculated twice and all other releted ratios was good despite net decrease in cash and cash equivalent of $1250, and in conclusion u can mentioned that this is why cash flow has a advantage over IS so cash flow is King cos cash flow and IS in Monty represent different picture of business performance

so guys i wish evryone good luck as well to myself

[Author]

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