Forum Replies Created
- Posts
You’re right about Contract 2 because I found out that the saving collection costs should not be a reason for significant financing components.
Hi! Contract 1 does not contain significant financing components, I wrote that the total monthly payments are not significantly different from the deferred payment. I remember there are two options so I compared those two amounts.
I forget about Contract 2 but I wrote there is a significant financing component because the company saves collection costs and the customers are not likely to renew contracts if the customers have to pay in instalments.
You will pass man. I am impressed by your ability to remember this much of the exam. For Q1, I didn’t calculate Investment in Associate, but the share of associate profit. I guess I have the same answer as yours.
For warranty, I think we just adjust the RE and that’s it.
Investment in loan notes is horrible for me calculation-wise… Because I initially recognised the financial assets using amortised cost (PV of future cash flows) rather than the cash payment + transaction costs.
I literally just wrote definition of FV and didn’t write about any valuation methods/approaches. Glad you enlightened me about highest and best use cuz I couldn’t think of that during exam and decided to move on to Q4.
For significant financing components, I concluded the otherwise. I concluded that Contract 1 does not have significant financing components while Contract 2 has significant financing components.
We will pass.
Hi, for this question (Kuta), if I recall correctly, the mark allocation is as follows:
– 8 marks about IMF and political opposition
– 19 marks for calculation (CFs from the foreign country, US CFs, base case NPV, and APV)
– 7 marks for approaches, discussion, assumptions
– 6 marks for TP
– 10 marks of prof marks
Hi. Thanks for your reply.
I just used the discount rates (two) given in another exhibit as the discount rates to appraise NPV (foreign) and NPV (US) particularly.
If I’m not wrong 13% for foreign and 9% for US.
Yup, I agreed on other things you said.
Hi, is there anyone here?
I wanted to check if my answers were correct for foreign cash flows.
It was a question called Kuta and my cash flows from Kuta were $45,000 before adding US cash flows (additional 12% tax on taxable profits and components’ contribution). And I got around $2+ million base case NPV after combining Kuta cash flows, US cash flows and NPV of license.
In the end, the APV was $5+ million plus.