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Yeah, should have regeared, hopefully get credit for approach, even though figures not right. Deceptively tricky exam for me. Could have went for another hour and so much knowledge not tested. That’s always the way though.
I think I may have got the Ba wrong for the acquiree as what you are saying makes sense that it should be the same as the Be if no debt. I was under pressure and not thinking clearly, so I just plugged then numbers in i.e. Ba = Ve/Ve+Vd*i-t). As Vd is 0 you get Ve/Ve which is 1.
I then used the multiplied each beta by tt’s Ve and divided by the Ve’s added together, to get the weighted avg Ba. I then plugged that avg Ba into the CAPM. I think that is what you are sayng in your second point. I then used that WACC to discount the casflows in the next part, that’s as far as I got.
I had not seen a practice question like that, so that’s why I lost so much time. You would think calculatig a WACC would be quick. I assume it was for some and I just wasn’t as prepared as I thought I was. I hadn’t spent that much time practicing WACC / APV as I thought they were quite straight forward and didn’t expect so much of one paper to be on cashflows.
The questions seemed very straightforward on first read of the requirements and I thought I was surely going to pass, but then finding the information in the scenarios took me a long time and I had massive time pressure issues.
I got Q2 and Q3 done well, but then only had an hour left for Q1. Was still feeling good, but spent a long time figuring out how to get the WACC and didn’t get much else done. Proobably answered 65 – 70 % pf the paper, so it will need to be mostly right. Who knows. Feel like I might have blown it.
I am also taking the exam remotely and have been provided with a potential solution. If I open the email “ACCA Education: Preparing for ACCA Remote Invigilation Exams” and click on the “system checks” link, it allows me to get to the launch exam link through there. The link is not yet live so won’t know for sure it works intil the morning, but it looks promising.
