[syedshah000]

Passed with 55 on 3rd attempt.Finally a long road to ACCA comes to an end.:)

[syedshah000]

John i have few queries realted to this question as well please help me out with these problems.

Since the question ask to calculate P/E ratio of T Co implied by terms of L intial and proposed offer. i repeat john its p/E ratio of T is asked with the terms of L. Then why in solution T shares are valued by price of L shares. i.e. $ 12.19 . i feel like it should be valued according to T and calculate p/e ration and then it adjusts with implied terms of L. please explain ?

In part c it says no extra finance is required if T shareholder take up the share offer.John can you please that with maybe from workings or else how it says that no extra finance is required ?

In comments it says if all five shareholder realise their investment instead of two the required cash is incrased by 512m. In its working how and from where they got 25% ?

[syedshah000]

Thank you John thank you so much for solving my great problem.:)

[syedshah000]

John i completely understand what you just write above.Interest can be for 9 years of 5.2m and in 10th years it should be 105.2 i.e. redemption at par and interest of 5.2. John this is not what i asked, i wanted to know whay the examiner use nominal value of $40m in redemption year for bond valuation. It should be 100 right, if it is redeeming at par.

Can you please explain that ?

[syedshah000]

John its from June 2013 Past paper

[syedshah000]

Soory John i was having your format in mind while i was solving this and i was confused because the answer didnt show profit or loss on option exercised that’s why i said that.

John first of all thanks a lot for bearing patience with me and clearing my concept here.

One last thing which i want to confirm from you. Since we are not given interest rates and period of investing for $20m reciepts. So the $20m reciepts are converted on exercise price of $1.36 which means option is exercised.

So if the amount is converted on exercise price on transcation date it means option is exercised and profit or loss on option are already included in it. ( Just like did in this question). So we dnt need to calculate profit or loss on options again separately. I can do same like this in exam as valid alternative like you said.

Am i rite here John ?

[syedshah000]

Dear John this is what exactly i meant but i didnt get this.

In option we buy the right to buy future @ excercise price. Since it was a call option in question we have the right to buy at excercise price of 1.36 and sell immediately at future price on transcation date i.e. 1.3714. We can make profit of 0.0114 by excercising the option. So my question is why the examiner has not exercised the option in solution ?

Please explain specifically related to this question.

Thanks in advance:)

[syedshah000]

Thank you so much John.

[syedshah000]

Dear John,

the question requires to calculate intra group and inter company curency transfers by multidrop Europe. As per solution there are total payments of 9.62+4.06+0.39+0.40 = 14.47 and the only reciept (Singapore) of 14.47. So Net result should be 0.

The solution states net result in gain of 9.62m. How this gain comes, Please explain ? and why the examiner didnt take 9.62 payment while calculating net gain.

[syedshah000]

John one more thing in solution examiner only calculate the net cost of loan for the option exercised, but didnt calculate net costs of loan for options which are not exercised.So my question is we have to do same like this in exam or have to calculate net cost for all options. Please advise on that.

yah john i read and understand your every notes, but john i was worried about how to apply thats knowledge on Collar questions thats why i asked about that example 7 answers explanation from you. Well i understands that and really thanks a lot 🙂

[syedshah000]

Dear John,

With the secound part of the option iii) i.e. In six years , the bond can be converted into 12 Hav Co shares or redeemed at par.

What is the relevance of this part in whole option iii ?

if we have find out already that for every 20 shares they recieve one $100 bond which is $5 per current share.

let say if we find the share price by conversion into 12 Hav co shares. Does it go wrong….?

Please explain the secound part of option iii and nominal value of shares and why these nominal value is used to determine number of shares , since we already provided number of shares i.e 12 in question ?

[syedshah000]

yes my frend you are correct and you ask too many questions.I been noticing your queries for quite some time now.Dewan a good piece of advice for you.
It better if you go to some tution provider or spend some $ and hire a tutor who will solve your all problems.lol.
I feel like you try to take unfair advantage of this forum and wasting your time as well by typing everything you want.
Nobody here is your personal tutor so dnt take it in that way.ok.and try to solve and learn something by yourself.This is really stupid at this level…… Hope many of us agrees.

[syedshah000]

Thanks John Just wannain to take an idea of how to do it. Well thanks a lot John really

[syedshah000]

Dear John like you said above if we use Mv of equity i.e 50m shares multiply $5.80 .then we have to calculate Value of debt by gearing of 12%. I am wondering is it possible to calculate Value of debt amount by only % of gearing provided in the question.

If its possible to find Vd amount. Can you please show me the working of how to do it. ?

[syedshah000]

Thank you so much John, you gave me the exact reason which i was looking for and solve my great problem.

[syedshah000]

Thanks John:)

[syedshah000]

Hi kristy,

Congrats on membership. Kirsty would you mind if i have your email. I wanna to ask you about PER. or if you dnt want to share email here. You can get me at english_dominator@hotmail.com . I ll be really thankfull for your advise and kindness.

Syed.

[syedshah000]

Do you really think that is possible….. well honestly i think its impossible.

[syedshah000]

Finally Countdown begins.5.30 hours to go.Hope to be an affiliate.Goodluck to everyone.

[syedshah000]

what about question 4. Did Anyone attempted. The exam cant be completed in such timeframe for sure.

[syedshah000]

Hay you ask too much but actualy knows very little about syllabus.

First learn your course book then if you face some problem ask John.

They are here to help you my frend not to teach you everything.

Hope you understand and care next time and please dnt try to take unfair advantage of their support.

[syedshah000]

So John just to clear my understanding.

When spot rate on transcation date is not given we cant calculate future price on transcation date and if we dnt have future price on transcation date.We calculate lock-in rate and lock-in rate is used to determine reciepts on transcation date and also number of contracts and this is related to currency futures. Rite John

( So If the above statement is rite. Just one last thing to ask you that This situation is only related to currency future or intrest rate future as well ? )

[syedshah000]

But John what i dont understand is this. The combined company asset beta is calculated by weighted average of asset betas. Then equity beta is calculated based on it( based on relative gearings).

Why WACC is used for combined company cost of capital ? i guess i missing something here.

How we ascertain in the end after grearing and regearing betas WACC is used to estimate cost of capital. ?

[syedshah000]

Thank you so much John:)

[syedshah000]

So it means John In Burung Co we can also calculate Net cash flows( i.e. Incremental Profit) in kit answer and take tax on these NCFs and then add tax saving on capital allowences, just like they did in Fubuki Co. Rite 🙂 i hope the figure will come same .

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