[Richard]

I can’t login either. The last time I was able to do it was friday. When I login I get a message saying that results will be available as from 08 February. This is very frustrating and stupid. Profesionalism is expected from everyone and ACCA and their site administrators are not exempted from that.

[Richard]

Q1 – Put option as you have the option to sell. In fact this question is a replica of the article on investment appraisal by Sunil Bandari

if I am not mistaken, Pa is the the sum of the PV from year 3 to 5

Q3 – As far as I can remember

Equity value of M = 210M shares x 5.80 = $1,218M
Equity value of N = 200M shares x 2.40= $ 480M

Weighted Ba = [(1218×0.9)+(480×1.2)] / (1218+480) = 0.98

Therefore : 0.98 = Be x [60/(60+40×0.8)

Hence Be = 1.5

Ke = 2% + 7% x 1.5 = 12.5%
WACC = 12.5% x 0.6 + 4.55%x0.4×0.8 = 9% rounded

Hope this helps

[Author]

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