Forum Replies Created
- Posts
Passed and done with ACCA.
P4 is the only paper that I need resit….
Didn’t practice for March, which I attempted 70 marks in total and got about 35…
Practiced for Jun, which I attempted 86 marks and got 60.The only tips for ACCA is 1) practice, practice and practice, 2) read technical articals in student accountant magazine.
Good luck to everyone!
@bilyana extracted from the AFM syllabus Sep 2018-Jun 2019
“The other Strategic Professional exams are all of three hours and 15 minutes
duration. All contain two Sections and all questions are compulsory. ”It seems that Sep 2018 paper would include 3 questions in total (1 in section A and 2 in section B) and all the 3 are compulsory.
@bilyana said:
Hi, everybody!I am about to attend P4 in September’18 and just read in the survey that from Sept 18 on there will be also a change in the exam structure- 3 instead of 2 compulsory questions? did I get it correctly or I misread something ?
wish good luck and positive mark to all who made in June
@finansist You are right that CF of y1 and growth rate of y2-4 was given, and different growth rate for y5 and onwards in the opinion of Polymnia and Clio. However, I thought the question said that the synergy saving was for y1-4 and stopped since y5, so synergy saving times 1-tax rate should be added to y1-4, but not y5 and beyond (@adolf121 ) Certainly I may be wrong as I rushed so much that I didn’t have enough time to read/digest critical info carefully. I got about $19.xx m and $39.xx m for 0% and 5% growth rate respectively.
Purely a guess based on marks allocation of similar question in past exam papers:
– OP CF 1′
– discount rate 1′
– synergy saving and tax adjustment 1′
– additional capital investment 1′
– value with 0% growth rate for y5 and onwards 2′
– value with 5% grwoth rate for y5 and onwards 2′
– comment on bid price 2′
– comment on counter 2′@finansist said:
@ivonne year 1 was given as an absolute figure and years 2,3,4 were given as a percentage increase werent they? I maybe wrong i cant exactly remember.
I now remember that from year 5 synergy savings of 400000 shouldnt be added but i think i added them ((((((. Thats why i got abnormally high figures for Polymnia value. With 5% growth above 50mln and with 0 growth 30mln
However i commented on those figures that 20mln purchase is bargain for Clio but P’s shareholders unlikely agree to this price and so on…… I hope i will get marks for the comments
Hope we’ll pass!!@elaine thought the question mentioned the decision criteria of the company: reject project with negative NPV, select project that optimize the soft capital rationing if project with positive NPV……Here the NPV need be considered is NPV before and after considering the value of options…By referring to related TA, I don’t think the examiner may try to test us anything beyond regarding the recommendation…
@unnysnowflakes said:
What did people recommend to The Board of Directors about Project A, B, C & D?
My recollection was A b and c has returns above the Cost of Capital , so I said if you can borrow / fund through equity do , and D was a very low return so don’t invest.@sharlene17 shake hands…..Same here, last paper, rushed a lot in both optional questions with lots of scratches, plus left 14 marks unattempted:(
@sharlene17 said:
I messed up big time too my entire paper was messy, lots of scratches . Started with question 4 hedging strategy …took too long…did not complete question 2 or #1 for that matter….my final paper and I messed up big time….still hope I did enough to pass@gt0707 just a guess based on the marks allocation of similar question in the past, may lose 6~8 marks at maximum if not adding 40 basis points, as such may lead to incorrect calculation of “impact of interest rate increase and decrease with future” (about 3 marks), “impact of interest rate increase/decrease with option” (about 3 marks) and “discussion & recommendation” (about 3-4 marks in total)
@gt0707 said:
hello guys,
do you have an idea how much marks we gonna lose if the 40 basis points is not adjusted to the interest rate. And the interest cost (calculated using 5% & 3.4%) is used.@sahil1234, wow, didn’t read such in Kaplan kit as well
@sahil1234 said:
That swaption question was the most confusing one. I never read about it anywhere in the notes or the BPP kit. Apparently 1×4 at 5% means that it is an option of a swap starting after 1 year for 4 years at an excercise price of 5% fixed interest rate.@adolf121, again rushed a lot in this question:-(, totally forgot to scan MVd of Polymnia during exam, but tried to recall critical info of the question now, don’t think that the question provides any info related to Polymnia’s capital structure. Not sure why you may try to find out value to equity holders of Clio. Shall try to find out MVd of Polymnia, then get MVe (TMV derived from FCFF – MVd) of Polymnia and compare the bid/ask price to see if the price is acceptable?
@adolf121 said:
Did you find the value to equity holders of Clio after finding the FCFF values?If so did you deduct the amount paid to get to the additional value to Clio
or did you use the 55% to find the equity value?
@finansist for Q2, “FCF for 4 years at a different rate”, didn’t remember any info provided in the question hinted different rate for cash flow of year 1 – 4. Could you elaborate a bit more? I may totally miss some critical info:-(
@finansist said:
Sadly, the areas that I didn’t revise and was weak came up.
Q1. Got BSOP wrong however NPV calculation was decent. Discussion bit was also good I think I was able to pick up some marks here and there. But just left soft capital rationing requirement completely as I was running out of time.Q2. Was relatively straight forward for me. I am hoping for most marks from this question. FCF for 4 years at a different rate and then two estimates with 5% and 0% growth thereafter. Ungeared Ke and APV calc.
Also discussion for reasons for acquisition and disadvantages of asset based and p/e valuation.Q3. FCFE calculation however was a bit tricky because foreign subsidiary involved. Got messed up with calc, sadly. Discussion parts were about dividend policy and increasing dividend repatriation in light of agency theory. Again bit muddled here.
Q4. I would love to do this question but was put off as soon as I saw “SWAPTION” in the discussion requirement.
Now just hoping for pass…
@adolf121, out of time, totally skipped the swap, but should the EIR be 4.6% = -(L+0.4%)+L-5% according to the info you mentioned below? anyway, I got no mark from this sub-question:-(
@adolf121 said:
I think the swaptions wanted us to explain what 1 X 4 meant and then show the effective rate achievable.Since hickamore can and usually does borrow at L+.40
They will receive L
Pay 5%
giving an effective rate of 5.40%Im not quite sure about this tho.
@elaine, totally skipped this sub-question due to out of time:-( do you by any chance remember the marks assigned to this sub-question of swap?
@unnysnowflakes said:
I think that’s what I got.Does anyone know the calculation for the 1/4 swaption at 5% was?!!?
I Hadn’t a breeze what to do on that so just answered with theory hoping for a few marks!
@adolf121, no unfortunately as I was in such a rush when working on question 4:-(.. the only thing I remember is for increasing base rate scenario, my EIR for both future and option is more than 5%, and EIR of future is higher than that of option; for decreasing base rate scenario, my EIR of future is 2.xx%, and EIR of option is 4.xx%.
@adolf121 said:
@ivonne
do you remember anything about the futures hedge?
What effective rate did you get?@streetgold yes, 40 basis point need be added on top of base rate to derive the actual borrowing rate for the company when calculating the NCF
@streetgold said:
Just wanted to ask, do i need to plus the 40 basis??? i didnt add it because the question say the maximum interest will only go over 5 and minimum 3.4@adolf121 you are right, either delay or expand, it’s a call option, making no difference when applying BSOP to calculate value of the option.
Just for discussion:-), the question says that the company has no obligation to conduct phase 2, and can decide by start of year 5 instead of now. According to below TA, it seems to me (i) an option to delay a decision to a future date, instead of (iii) an option to exploit follow-on opportunities which may arise from taking on an initial project, because both opportunities, phase one and phase two, are known now.
@adolf121 said:
Hmm. Cant remember them specifically saying that Project E was a delay option. But its just a technicality since both are call options.But I highly doubt it.
Anyone reading this, I highly recommend reading the technical article.
The question was entirely based on this.I followed same logic and used balancing method for year 4, though I don’t remember the initial NCA investment figure
@adurich said:
Capital allowance was on 25% reducing balance machineryWhat I did was
25% of 120000=30000
90*25%=22.5
67.5*25%=16.875
50.625In 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)
Same question.. could anyone please share the marks assigned to (d) soft capital rationing of question 1 and (c)..? of question 4?
@accastudentz said:
What were the theory bits and Mark allocation in Q1Something like
Soft capital rationing and finance avail if not used for 9 marks
And then something at the start before the report ??
No surprise that time management issue came up, as such was pointed out as top one problem in the examiner report of the past few exams… I spent about 2 hours 15 minutes for question 1 and sadly had to totally skip last sub-question about soft capital rationing even though… I really rushed for optional question 2 and 4…. I probably only “reserved” (seriously totally unplanned) less than 30 minutes for question 4. I once thought I could do very little of question 4 because hedging usually required lots of calculation. Though I fully skip the last sub-question of question 4 (even didn’t have time to read what that was at all:-(, I was relatively satisfied as I managed to finish more than expected in this question….
Q1, I got discount rate 8.8% which can be rounded to 9%, so should be the same as yours… but I didn’t use APV for phase one since there is no financing effect based on my memory of the info provided by the question….
I didn’t remember clearly about all info provided about discount rate by the question… but based on my member which might be wrong.. the question provides the equity beta of a business that engages in business activity similar to project E and says that management team believe it can use this equity beta… so I used such equity beta to calculate Ke based on CAPM, then used Kd and capital structure data of the targeted company provided in the question to calculate WACC. I got 8.8% if correctly remember, and used it to discount all cash flow of project E, except for cash outflow i.e. initial investment needed by phase two as the question says 5%, Kd of targeted company should be used here…..anyway, the NPV I got for negative NPV for both phase one and phase two, which I felt odd and probably made mistake somehow….. anyway, I hope I can pass:-)