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You must not use this as an answering mechanism for lots of questions you have clearly not watched our relevant lectures, paid attention to your tutor. My advice is do not it try and learn by looking at past questions.
Get a good understanding of the paper first.
Our role is not to give private tuition and therefore you must watch the free lectures. If you expect answers from us, then you should clearly state the question individually and say why you are struggling with it.
Stating that your tutor had set you them to do but hadn’t give you the answers makes me think you think you misunderstood what we are about.
Can you make your questions clearer if you want our help please
Don’t put two or three questions together
Where are these questions from?
Please do not simply type out a full question and expect to be provided with a full answer.
Explain what it is you are struggling with.Surely you must have an answer in the same book/exam/hub which you found the question. So ask about whatever it is in the answer that you are not clear about and then I will explain.
The first question is a convertible debt question that requires you to work out the conversion value and then using the IRR which you know equals zero gives you the balancing figure of MV of debt.
The second one is testing your understanding of DVM
The third one is testing your understanding of EMH
You can find everything needed to be able to answer these questions in our free lectures. The lectures are a complete free course for Paper FM and cover everything needed to be able to pass the exam well.
The figures that relate to discount rates in ‘real’ exam questions , live mocks etc will always be accepted within a range of answers.
This is due to exactly what you have said some candidates use tables, some use formulas either themselves or by using calculators. All with give a slightly different answer.
Watch John’s videos on IRR
You will either understand or not, if not just accept and move on from this 2 mark question
Think about a u shape
When there is an outflow followed by inflows and then more outflows, with two changes of sign and therefore potentially two IRR’s.
If it is an outflow first, then the curve will be u-shaped.
If on the other hand it was an inflow first, then it would be an inverted u-shape.
So again, having two internal rates of return (IRRs) indicates that the cash flows change signs more than once.
In this case, the cash flows are negative at time 0, positive at time 1, and then negative again at time 2.
Therefore, the NPV will be positive below the lower IRR of 10% and will become negative above the higher IRR of 25%.
Thus, for the project to have a positive NPV, the cost of capital must be more than 25%.
The project in question has two internal rates of return (IRRs) at 10% and 25%. When a project has multiple IRRs, it indicates that the cash flows change signs more than once, which is typical for non-conventional cash flows.
In this case, the sum of the undiscounted cash flows is positive, meaning that at a 0% discount rate, the NPV is positive. As the cost of capital increases, the NPV decreases.
So:
The NPV is positive when the cost of capital is below 10% and also when it is above 25%. Between 10% and 25%, the NPV is negative. This creates a U-shaped curve when plotting NPV against the cost of capital.
The NPV curve crosses the horizontal axis (NPV = 0) at the two IRRs: 10% and 25%. Therefore, the NPV is positive for costs of capital less than 10% and greater than 25%.
The correct answer is A) more than 25%. This is because, at any cost of capital above 25%, the NPV will be positive, while it will be negative for costs between 10% and 25%.
U-shaped graph illustrates the project is viable at both low and high discount rates, but not in the middle range.You will get marked accordingly to OFR
So if you made a mistake the marker will follow the error through.
You will receive partial credit for those components.No this is unlikely but if you did have a case of a negative operating cash flow resulting in a tax saving, this is effectively a cash inflow for the project. This means that instead of paying tax, the company benefits from a reduction in its overall tax liability due to the negative cash flow.
The two options that are consistent with dividend irrelevance theory are:
A. The value of a company is determined solely by the earnings of its investment decisions.
C. No transaction costs are incurred in selling shares.Option D is incorrect because differing rates of taxation on dividends and capital gains can affect investor preferences and thus influence dividend policy, which contradicts the premise of dividend irrelevance theory.
Apologies for the delay
Putting a comment is acceptable
BUT we prefer Fav or AdvC. The credit period allowed to customers is reduced
This would actually decrease working capital because it reduces receivables as customers pay their debts more quickly, leading to less cash tied up in accounts receivable.
D. The credit period taken from suppliers is increased
This would also decrease working capital because it increases payables, which are current liabilities. An increase in payables means that the company is delaying cash outflows, but it does not increase the net working capital.
https://opentuition.com/acca/pm/planning-and-operational-variances-part-2-variance-analysis/
If a variance is under the control of the organisation it can be called an Operational Variance, whereas, if it is not under the control of the organisation it can be classified as a Planning Variance.
Operational variance a variance in which non-standard performance is defined as being that which differs from an ex-post standard.
Actual versus revisedPlanning variance a variance caused by ex-ante budget allowances being changed to an ex-post basis.
Revised verusus budgetThe high-low method is not applicable here because it typically estimates variable costs based on the highest and lowest activity levels without considering fixed cost step-ups.
In this case, the fixed costs change at a specific production level (15,000 units), which requires a more precise calculation using the equations derived from the budgeted costs.
Since the variable production cost per unit remains constant between 10,000 and 20,000 units, we can determine it from the budgeted costs at these levels.
For Level 1 10,000 units = Total cost of $81,900
For Level 2 20,000 units = Total cost of $126,060
The fixed costs increase by 15% when production reaches 15,000 units. Therefore, we can find the fixed costs for both levels of production. Which means 0.15 so the formulas are something like:
FC + 10,000V = 81,900
FC(1 + 0.15) + 20,000V = 126,060Solve the equations simultaneously
Calculate the total cost for 16,000 unitsHave a look at the ACCA Formula Sheet given in the exam.
And then have a look through the textbook to see what is not on the sheet.
There are a lot not given that you have to know:
ROI = (Net Profit / Cost of Investment) x 100.
Gross Profit Margin = (Revenue – Cost of Goods Sold) / Revenue x 100.
Efficiency, liquidity, investor ratios like:
Debt-to-Equity Ratio = Total Liabilities / Shareholders’ Equity.
EPS = (Net Income – Dividends on Preferred Stock) / Average Outstanding Shares.
Etc …We calculate the interest saved at the same rate as the overdraft interest because it allows for a direct comparison between the cost of borrowing through the overdraft and the savings achieved by reducing the overdraft through advances received from the factor. When advances are received, the company saves overdraft interest, which is typically at a higher rate.
Calculate the new earnings (profit after tax)
You start with profit – $55 million.The interest on the bank loan that will be redeemed is calculated as 50 * 1.5 * 0.08 = 6
Tax so 6 * 0.8 = 4.8
New earnings after tax 55 + 4.8 = 59.8Total of shares in issue 100m + 50m = 150m
Then 59.8/150m = 0.399Because it asks for:
What is the estimated value of an KualaCo share?
A share means equity
Share value is calculated by dividing a company’s total equity value by the number of outstanding shares, or more simply, by multiplying the number of shares owned by the current market price per share to find the total value.
