[farhantahir786]

Yeah collar is more expensive than the option only as it fixes the interest between a minimum and maximum.

So standard option is cheaper in a market where rates fall.

I calculated my basis differently (assumed spot rate was 3.1% lol) so my answers are on that basis (i.e. original basis of 0.98).

[farhantahir786]

Basis risk is the risk that it doesn’t move in a linear manner. Basis would still exist however.

That’s my understanding anyway

[farhantahir786]

@taxman123 said:
Why would you go on calculating percentages when the question asked you to calculate the costs?

i assume that by percentages you went on to calculate the effective interest rate after the hedge? Which was not necessary in this question.

Also, did anyone else find that both options were not to be exercised? So the cost for options was their premium only?

Effective rate is also the cost lol. It’s just the way the Kaplan tutor went over it.

Yeah none of the options were to be exercised. As it was to protect against an increase in costs, the fall meant you don’t need them :). So cost was just premium paid and the spread and the current spot rate.

For the collar, the buyer of call options at 96 would exercise it for a wee gain. Put option would lapse.

[farhantahir786]

@natmhl813 said:
Q1 is horrible.. I thk I got 12m for the additional value created.. and sth like 20m for earnings for metaxi before acquisition then completely not able to calculate the others….

Q3 I got positive NPV in tht Bxxxxxland country… and negative NPV like $ -2xx m when I take into account the additional tax n profit on selling components in home country… the calculations look so wrong but hopefully I can get some marks for the written bits and also the workings…

Q4 the loss on futures is like 193000? And the option choice seems cheaper than future and the collar….

Everything looks so wrong tbh… how can this paper be so hard? Can anyone share what they got too?

Future seems accurate. I didn’t bother with the numerical costs coz of time issues (just work in percentage rates as it’s faster and allowed I think). But future deal was most expensive. I think that was a given because the rates fell. So options are always better when rates fall. Collar was cheaper to (only slightly…).

Not sure about the other stuff because I can’t remember what I put lol.

[farhantahir786]

@alexanderrobert1989 said:
Exactly, Equity: Ordinary x Mv shares and Reserves
Debt: MV of debt and New debt

Yeah I did the same, gearing levels were low against the market average but interest cover went down so they were below market value.

Everyone seems to have ignored reserves?

I didn’t add reserves as the market value of shares should already have it in consideration. But unsure lol.

[farhantahir786]

@alexanderrobert1989 said:
How did people calculate the Debt to Equity in MV terms in the first question along with profit?

If reserves were included it massively reduced the any levels of gearing?

In terms of profit, you have the interest gearing which is profit before Interest and Tax over interest paid. So you can workout the profit levels.

For part b, i wrote that the interest gearing level was low, loan note was high-interest, even though d/e ratio was low compared to the market, it was a lower-quality loan note given that there is a risk that the interest will not be payable.

[farhantahir786]

@alexanderrobert1989 said:
How did people calculate the Debt to Equity in MV terms in the first question along with profit?

If reserves were included it massively reduced the any levels of gearing?

We got the share price, so I times that by the number of shares. Then calculated the MV of Debt from holders perspective.

My DE ratio was like 0.10…

[farhantahir786]

@kbourne said:
anyone get C for the DIluted EPS question?

yep. calculated bonus shares in issue, added it to the existing capital, got EPS for this year, and applied new shares to old earnings – 99.99999% sure I put C! (22.5 for last year, and whatever this years was).

[farhantahir786]

@kbourne said:
was that D? I defo did a Dr to the P&L but can’t remember if 3 or 3.5K

Not sure what letter it was – but the options where 87(?)k or 3k. So, I think you got the same as me

[farhantahir786]

@kbourne said:
Thanks buddy. That was my approach……but you doubt everything. Main issue for me was Q3 – the Fin Lease and Convertible Loan took me offline and I over-ran by 10 minutes or so…..which meant I dropped 5 marks by not doing the excerpt from SOCF and also part b of interpretations – which was actually a walk in the park this time!

Good to hear 🙂
I agree – the convertible loan part was not that fun, finance lease took time thinking about :/.

[farhantahir786]

@kolkleen said:
Who remembers the question on provision where the provision for the year was like 80 something thousand. I got confused with the 6month warranty thing. Wasnt sure the previous one would have been reversed and the new one credited in full or just the movement.

3k Debit entry was my answer

[farhantahir786]

@kbourne said:
Hey guys……anyone remember how they calculated the Net Assets figure in Q1 (consolidated P&L?) The opening balance was given in question but there was then a FVA and excess deprectiation…..did everyone deduct this from Net Asset figure?

it was given in the question – you only had to do a fair value adjustment.

[farhantahir786]

@hermain97 said:
For ratio qn what did u guys write for part b 4 marks

past information
growth prospects
industry analysis
market share info

[farhantahir786]

@genty said:
I the option that said all of the above

I picked that option also.

[farhantahir786]

@abdulazeez44 said:
True. But after doing so much, making it balance kinda gives an “I did it” feeling.. Nevertheless, paper was pretty hard, comments here are making me feel positive, so lets hope for the best 🙂

Hopefully! I get what you mean – I try and balance them when at home for re-assurance, but otherwise it depends on what time I have (which, given this paper was a joke, was limited).

Just make dua!

[farhantahir786]

@s4k1b said:
So the answer was NCI and Retained earnings only ? i chose this answer.
Can anyone confirm?

My reasoning…..

W2
inv val
nci val
x

FV os SNA @ DOA
sh
ret ears
x = g/w

GW in then impaired (parents share) in W3
&
nci’s share is impared in W4

I can’t remember the options, but i’m pretty sure I said it impacts all four (Impairment also hits the P&L

[farhantahir786]

@save said:
Hi Farhantahir,

I did exactly the same, therefore we have to hope it is correct 🙂

Cheers

S.

Hope so! I know a couple of people in the hall did the same, and it’s what the question hinted at.

[farhantahir786]

@abdulazeez44 said:
Did yours or anyone elses balance sheet balance? If so, what was the balancing figure? I had a difference of $9000. Did u take the 24-9 for the PPE calculation? The FCs agree with mine though. So thats a plus 🙂

Haha you don’t get marks for balancing a balance sheet, so I don’t actually bother trying asit’s a waste of time. But I doubt it balanced to be honest as I didn’t do to good on the convertible loan part. Good to hear about the FC’s! 🙂

[farhantahir786]

@hermain97 said:
That mcq about effect of the goodwill impairment? I chose only NCI
Am i right?

Standard workings – Impairment goes into NCIs P&L, retained earnings of parent, NCI in the SFP, etc. It’s listed like that in Kaplans working pro-formas.

[farhantahir786]

@hermain97 said:
What did u guys use for opening balance of finance lease arrears table in qn3?
I used the prev lease’s 24000 + (6000-1000 deposit) = 29000 as opening and did 2 years’ table
Got the finance cost and closing liability from that table
Pretty damn sure im wrong

Right shares : share capital × 1/5 right? Or 1/6?

And convertible bond was also horrible
Didnt know what to do with suspense A/C either

Opening balance was $13,000 (initial CV was 24,000 but then there was $9,000 dep and further down the columns it said obligation of $13,000). I then added $5,000 to it (same reason as you). Gave a FC of $1,800 for leases, and there was $1,600 for loan interest (effective was similar to actual as per question). I could be wrong however.

[farhantahir786]

You ignore the $500,000 as it’s not a group pre-acquisition.

[farhantahir786]

Question 1 and 2 and the multiple choices were fairly straightforward. Question 3 had a couple of awkward adjustments (specially the convertible loan…)

[farhantahir786]

@mjgn20 said:
You use the contingent at Acquisition which was the 4000 off the top of my head, as the questions asked to calculate the Goodwill at ACQUISITION.

Basically^^

You would then record a transaction in the P&L to account for the increase in deferred income of $500,000 (as an expense).

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