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Just an FYI, an element of the question is based on NPV with a requirement to calculate the value of a project that starts in 4 years and proceeds for 15 years and calculating the percentage change in a particular variable that would result in a negative NPV (sale price per unit in this question)
An extremely difficult question all round.
Chapter 10 in OT notes and lecture – is this sufficient to be able to complete the sensitivity of a particular variable?
I could answer approx. 5 out of the 25 marks available on that question. And that’s not to say I would have scored 5/25 in the real exam.
Thanks
The solution calculates basis of 0.46 based on initial inter-bank rate of 4.09%
The same basis of 0.46 was used when the interest rate went up/down by 0.9%
Basis when rate went up: (0.95.01-94.76) = 0.25
Unexpired basis (0.25*2/5) = 0.1(100-4.99) 95.01-0.1 = 94.91
(94.76-94.91)/400*(32*2m) = 24,000 loss
deposit at risk (48m*4.79%*4/12) = 766,400 – 24000 = 742,400
effective (742,400/48m)*12/4 = 4.6%
Loss in 33,600. If i had used the new basis of 0.25 – would I still get the full credit?
In addition, the options calc:
Where is the 94.55 coming from? Why is it not 94.81
I am getting 94.81 from:
100-4.99 = 95.01 – 94.5 (stike price) = basis of 0.51 creating an unexpired basis of 0.2
Futures price = 95.01-0.2 = 94.81 !!!
this question is terrible or has my mind just gone blank!!
Ok thanks.
In terms of Washi Co, I do not understand which sides of the spread to use when calculating the cross rate. Finding the logic behind the solution difficult.
JPY/EUR 129.2-132.4
ARD/EUR 92.7-95.6Cross rate: 132.4/92.7 = 0.70
Why not 129.2/95.7?
This yields 0.74
I have been through the below thread – just not grasping it.
https://opentuition.com/topic/cross-rates-washi-sep-2018-kaplan-exam-kit/
Thanks
Hi John,
If share exchange amounts to 2.55:1- where is the 18:7 coming from?
I understand 18/7 = 2.55 approx.
How is the 18:7 being calculated?
Thanks
“Even if you were to be asked such a question in AA (which is unlikely given current exam style and standard)”
This question comes from the AA specimen which I passed – is this a good indicator of performance so far or is the specimen more basic than the thing?
While control risk element is not perfect, considering the rest of my answer, is it of an acceptable quality of the standard expected in AA?
Yes I got the same. Did you include advertising costs when calculating profit for the variance question?
Struggled with the veggie pot target cost question too.
Found it extremely difficult – been studying for 5 months.
It was a tough one.
That is, the receipt of 500,000 in 6 months.
In the solution, only the 300,000 payment was hedged.
I would have thought the net amt would have been hedged.
Hi, can you please help me with the below question:
Can you please explain why the below solution is different to what we are being taught?
A company uses weighted average method to value its WIP, following information is available :
Regarding Process X of the company:
Value Opening WIP 660units $990
Units added in period 1,500units $2,250
Units transferred to Process Y 1,050 $1,575If the units are 50% complete for material, what is the value of closing WIP of Process X for
period 1?A $1,110
B $832.50
C $1,665
D $1,125I calculate E.U (660+1050+(1110*50%) = 2265
Total Process Costs = (990+2250) = 3240
Cost per EU = 3240/2265 = 1.43
Closing WIP = (1110*50%)*1.43 = 793.65SOLUTION
Value of closing WIP = Value of opening WIP + Value of units transferred into the process – Value of units transferred out of the process = $990 + $2,250 – $1,575 = $1,665.
