[Oxana]

Hi, is it was CBE or paper? How hard it was?

[Oxana]

Hi, did you pass your F4? It was CBE? How hard it was? Im thinking to take this exam but still not sure if shall I do CBE or paper one. Your advise?

[Oxana]

What is the best (easiest) way to pass F4? CBE or paper exam? Whicn one is more difficult?

[Oxana]

I did the same in Q1. Is it not correct?

[Oxana]

@johnmoffat said:
Sorry – I must have been answering too fast because I made a mistake.

At the moment, the total fixed overheads = (10,000 x 2.88) + (12,500 x 2.40) = 58,800
If they only make X then the fixed overheads will be 58,800 – 6,000 = 52,800.
For a profit of 144,000, then therefore need a contribution of 52,800+144,000 = 196,800.

X generates a contribution of 10.56 per unit

Therefore they need to produce 196,800/10.56 units = 18,636 units (which is the correct answer 🙂 )

Sorry about that.

Thank you John, it is ok.
I thought I missed something.

[Oxana]

@johnmoffat said:

2. If they only make X then the fixed overheads will be 144,000 – 6,000 = 138,000.

Dear John,

Could you explain please why fixed OH is 144.000?
Thank you

[Oxana]

@johnmoffat said:

Question 1:

The standard idle hour are 5% x 6,000 = 300. The actual idle hours are 330. So there are 30 excess hours.

The pay rate is $10 per hour. However the standard hours worked are only 0.95 hours for every hour paid. So the standard rate per working hour is 10/0.95 = $10.53.

So the variance is 30 x 10.53 = 3159

It would help you to watch the free lecture on this!

But in Mock Exam the right answer is $2.712 (favorable). Why is your answer different? Which one is fair?
Thanks

[Oxana]

I did and still cannot see in lectures the same answer as in notes. Any power of in such calculation in answers.

From notes:
Example 1, Chapter 5.
Customers currently take three months credit. We are considering offering a discount of 4% for payment within one month.
Calculate the effective % cost p.a. of the discount.

Answer to Example 4
Effective annual cost = 4/ 96 x 12/2 x 100% = 0.041 x 6 x 100% = 25% p.a.

Where is here power of?

From lectures:
The same example shows the right answer is 27.7%.

Why? How should I know and believe which one is right?
Thanks

[Oxana]

I do not agree Serra.

If you have a look at F9 notes at this website (Chapter 5, examples 1,4, 5) you cannot see any power of. All parts of formula multyplaied by each other and by 100%

[Oxana]

@johnmoffat said:

With regard to the second question:

The dividend growth rate is fourth root of (24/20.51) – 1 = 0.04, i.e. 4%
The shareholders required rate of return = 3% + (0.5 x 8%) = 7%
The dividend just paid is 24c

If you put these in the dividend growth model formula you get a market value per share of $8.32. Therefore a total market value of 4M x 8.32 = $33.28M

John, why do you ignore risk fee rate in second part of formula?

I suggest it should be as in Formulae sheet for exam
CAPM 3%+0.5 (8%-3%) = 5.5% (not 7%)

So MV of share of $16.64 and capitalisation is $66’560’000.

Am I correct?

[Oxana]

Hi John,

sorry for asking here but it easier for you to understand my question.

Could you explain please from above example why do you add 1 to annual rate (calculated as 1/99 * (365/25) *100% ?
My calculation is 1/99 * 365/25 * 100 = 14.75%

Thank you.

[Oxana]

Thank you very much John!!

[Oxana]

John, I am sorry but I dont understand.

What does it mean ^ ? The same as * ? Why 1 + and -1? This is discount?

I know a formulae as :

(discount / 100 – discount ) * (365 / current days – new days) *100

You use another one.

[Oxana]

Thank you very much for your help!!

Please have a look for another one.

A company has sales 200mio per year. Currently customers take avarage 40 days to pay. The company wants to offer discount 1% for payment within 15 days and expects that 60% of customers will take the discount.
What is effective annual cost of offering the discount?

My calculation.
Currently 40 days.

New 15days*60%=9days
40days*40%=16days
New total 25 days (less 15 days 40-25)

(1/99) * (365/15) *100 = 24%

But right answer is 15.8%. Where is a mistake?
Thank you.

[Oxana]

Thank you very much John. It is really very simple.

If you don’t mind I would like to ask one more question.
Thank you in advance.

Q. The share price of CP is $4 per share. They announce a 1 for 5 rights issue at £3.10 per share.
What % of the rights offered to a shareholder does theshareholder need to take up so s to have no net cast flow from the issue?

[Oxana]

ABC Co has just paid a divident of 24 cents and its current share price one year ago was $3.60. The total shareholder return for the year was 23.3%.
What is the current share price?

[Oxana]

Thank you very much. It was mistake to find g. I used the calculator but wrong way. ))

[Oxana]

Q. A company has 4 million shares in issue with a nominal value of $0,50 per share. A dividends of 24 cents per share has just been paid. Four years ago, the dividend was 20.51 cents per share.
The beta of shares in the company is 0.5. The risk free rate is 3% and the market premium is 8%.
What is the market capitalisation of the company?

A. My calcullation:
4V—- 24/20.51 – 1 = 0.033 = 3.3% – g
E = 3 + 0.5 * 8 = 7%

P = 0.24*(1+0.033)/0.07-0.033 = $6.8

$6.8 * 4 mio shares = $27,200,000

Is it correct answer?
Thank you in advance.

[Author]

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