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I had 115-120 million profit using Plan A and 139.9 million using plan B
Happy to see similar answers!<cite> @thehardone said:</cite>
Q1 (a)
used MM model to calculate ungeared Ke of Competitor firm. It was 11%Q1 (b)
Used 11% calc above to dicount free cash flows before and after BAhari project. The firm value was around$ 550 Million. Value of Bahari project was calculated using APV method. It was around $ 10 M.Q1 (c)
Asked Whether the unsecured bond holders will accept the debt to equity swap or not.
The debt was 10 yr, 13% coupon, nominal value $40M (please correct figures if theyre wrong)
According to the swap these bondholders will get 10% of the co’s equity shares after listing.
10% of shares would be 550M x 10% = 55 M
This is to be compared against the Market value of debt. Which I calculated using 7% Discount rate.Q1(d)
Calculate the range of initial share issue prices assuming 100 million shares.
I simply divided 550M/100 = $ 5.5 per shareAssumptions in calculating share price.
Reasons why a company would want a listing on stock exchange.
WOW. I just remembered.. the first question companies were both mining ones i.e same business but different financial risk which meant ungeared KE could be used as cost of capital.. right?
At any rate, my numerical answers match yours but my discount rate was different (assumed) since Q1 (a) was a part I just could not solve, completely panicked. Assumed KE 15%
Q2 Was Mergers and Acquisition. Calculation of post-merger company value based on adjusted (lowered) combined PE and individual company MVs + Synergy benefits and value of intangibles (CIV) as well as assessing different forms of takeover finance ( cash, shares, bond) and calculating premium received by target shareholders as percentage of pre acquisition share price.
coolbreeze and everyone else, I feel this was a disaster as well.. I was prepared and knew 97% of the paper but was only able to attempt 80-85% … not sure if i’m passing 🙁
Danny, there is a fundamental assumption and a concept that I believe you have gotten all wrong;
Whenever it is stated that a cashflow has arisen at the END of a particular year, that means the cashflow is to be treated as occuring in that year (you can assume at the start of it!).
Thus the positive cashflow starting in year 4 through year 15 occurs for a total of 12 years. We use the annuity factor for 15 years multiplied by the discount factor 1.11^(-3) to discount the cashflow for these 12 years.
Hope this helped.
Could you provide links for ansi’s topics? Ansi if you are planning any such sessions please do inform us so we can join. Thanks in advance 🙂
I dont really use twitter and I have classes thursday-saturday 2-8pm UK time
How about skype or something? Facebook?I’m gonna be sitting for F9 in june ’12 provided I pass atleast 2 exams in my previous attempt. Would like to take part in a study-group for it but i’m clueless about how this works, I have alot of free time so I am willing to lead any sessions, just brief me about how this works. Thanks.
I was pumping my fists when I read the questions. BY FAR the easiest exam to date (UK version). And yes The Calculator, spot on about the case
@hamsterham said:
For 1, did you add the lost contribution and the penalty together for one of the bullet points? I did, not sure if that was right. I think it was.Yeah I did, together with the engineers salaries that made their relevant cost.
It was not too tough, but I was ill-prepared as I only started studying a week before the exams.. If I pass which I hope I will, the entire credit will be due to the open tuition team!
Exam wasn’t that tough at all. Perhaps the fact that I realised early on that Q3 (budgeting theory) was something I hadn’t prepared for allowed me to do the remaining 4 questions well. Left Q3 for last and did the best I could. Still had 10 minutes left when the paper ended. Hoping for atleast 60%!