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I started off with Q2 first..
Q2 – I dunno if there was some mistake or something.. The spot Int rate was 4.09% but the options and futures were quoating at very low premiums..
I also dint find the amount of interest and then find out the effective rate… I just added/ subtracted the ticks from the spot rate to arrive at the effective rate… It is also a correct way of doing when the hedge is perfect but I dont see that in any of the text books.. Will i be deducted marks for not calculating the amount of interest but rather directly arriving at the interest rates..???Q3 – PV of FCF was a huge 3k odd million figure for me… Tht would be a considerable premium to the market value… I dunno if I was right on it… But what did u guys get..??? It all seemed right though.. coz the growth rate was is perpetuity… Anyways part b was confusing.. I dint know what to write…?? and part c I just discussed the alternative forms of finance available with a cautious note on additional debt finance as the gearing was already 40%..? Did I miss something here too..??
Q1 – I got a negative NPV of 650,000… I dunno if it was right.. I also wrote an assumption to an effect that the extra 5% tax suffered was not available as credit.. In the options part you dont calculate the PV from year 2 or year 5 or so on… U just need to calculate the value of option with Pa – the total cash inflows from the project for the whole 5 years… Pe would be 28M… I got a 1.03 M value for option… SO the project would be worthwile if the value of option was also considered… Shame that I could not spend more time on the report… Time was up before I could phrase it in professional language and in a professional format… shame that really…
On a whole, I expect to just make it..
Anybody else got the same answers as I did..??
I tought that the second question had some snag somewhere?? (or did i miss something?)
thefutures price and the spot price had a large basis difference… that put me off a lil bit…
Thanks a ton..!!
1) Do u mean to say that I can use the 2011 study text for the Dec 2012 exams..?
2) What about the other subjects..??@alkemist thanks for that info mate….. I will keep your info in mind about appearing for four exams before entering for exams in March…..
So then, is it ok to use the 2011 study materials for 2012 exams coz getting new study materials costs quite a lot in the country from where I come from..