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Is anyone remembering how many marks were in the competition authority question or how the split of marks was in question 2?
@Elliott479
Thank you for your reply.
It comforts me a little as I also got 57% positive impact in wealth for Yekkon’s shareholder (forgot to comment that they would accept the offer as well above the required 20% but maybe other considerations re control or wanting to consider other bidder offer or hoping price would even go higher as other bidder, so 3 easy marks lost there). I also forgot to calculate the change in EPS for Yekkon. I felt so time pressured and wanted to stick with time but also wanted to get as much of the easy marks as quickly as possible as I started with Section B and moved backwards.
Also, as soon as I started the exam, I realised that the keyboard was not working and they had to move me to another working station after they tried to fix it. I was so tense that I was nearly in tears and when I could continue with the exam, I was shivering.Just realised that royalties had to be substracted as cost in sub in sub currency and added as income in home country. I just added them as income…so bad…hopefully I will not lose too many marks for that
@Elliot479
For acquisition/company valuation question, did you calculate market value of both companies as share price times number of shares (with Yennock share price calculated using other company PE ratio)?
Was it then the sum of earnings plus synergies to get combined earnings and previous PE+10% to arrive at new share price (with 800 + 450/3*2 = 1,100 shares after issue)?I remember the way I answered quite well but can’t guarantee I didn’t mess up cells/formula.
In CL currency I had revenue (units times unit price which was already inflated), minus variable costs (again units times cost per unit inflated at 20%), minus transfer price ($5 per unit inflated at home country inflation 3% and then translated in CL, but not sure this was to be included), minus fixed costs inflated at inflation rate, minus TAD (which i added back after calculating the tax). Tax at 25% on operating flows, TAD added back, working capital (incremental amount only), investment cost in year 1 and scrap value in year 4. That was it for the flows in CL I think.
I then translated at FX to dollars and added contribution, deducted fall on contribution for stopping exporting $0.5m annually (not sure that had to be accounted for either), added royalties and calculated tax at 20% on extra flows. Then added to remitted flows and calculated NPV at 13%.Please let me know where I went wrong. Thank you
My exam had first question with international NPV (can anyone tell me what they calculated, I had 4.something million positive?) and 10 marker re free trade, single market and customs union.
Second question was acquisition share per share offer: valuation and gain.
Third had interest rate hedging with collar. Disaster 🙁