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This is the first time ever that I am seeing the technical article on decision tree. Gobsmacked!
@ kamdarvivek, like I said I “assumed” as there was no time to think at all in that exam. My goal was to do as much as I could within the allotted time. I never completed the put option because I was already getting a negative figure for the call option so I abandoned it….So yes, your logic might be right and you might get the marks.
Yes I got the same @williams1977. Then I applied that on the book value of the debt to get the toral market value of debt.
@brizraj, to be honest I just assumed the standard deviation had to be the second one which affected the cash flow from year two if the project grew according to plan in the first year, also coupled with the fact that Lumi wants to buy the tourism project at the start of year 2.
@Williams1977, that sentence threw me off balance. I found the MV of equity which was 7.5 x (800/0.5) then I thought…now what? What do I do with this multiple? So I multiplied it by the MV of equity to give me the Freecashflow. But then at the last minute, I thought the multiple might be the growth for the Freecashflow so I CANCELLED my valuation and did MV x 1.072 instead, my gut instinct tells me I am wrong!
@kamdarvivek said:
Decision trees, black scholes all in q1???The confusion is that most questions we did in revision or past exams you have to calculate the FCFE from sales revenue/op cash flow less interest etc.
They already gave the FCFE! On top of that there was ROI and changes in FCFE.
Where does the put call option come in here and how is it used? I did not know what to do with the probabilities, I completed ignored since that would be under expected valued and probability analysis.
The put option was the Lumi offer, option to abandon and sell the project to Lumi for $50m (I think).
Where does the put call option come in here and how is it used? I did not know what to do with the probabilities, I completed ignored since that would be under expected valued and probability analysis.</blockquote
The put option was the Lumi offer, means option to abandon(put option) and sell to Lumi for $50m (I think)
Yes I do agree the proxy beta is a weighted average but we must first ungear the equity beta for the luxury business before adding it on to the asset beta for the non luxury business to get the combined asset beta which is the weighted average using 85% and 15%.
I am sincerely gutted! I studied so much I thought what question will they bring that I won’t be able to answer? I was soon to be proved wrong! Indeed nothing prepares you for the level of difficulty to expect in the P4 scenarios. I can’t seem to get over that Q1.
I have never written an exam this hard in my life!!! Q1 was HORRIBLE. What was that about the MP being multiple of 7.2 and the combined Freecashflow increasing to 7.5??? And then there was two different probabilities with two decreases in cash flows??? Oh my God!!!
I saw the put option BUT it gave me a negative figure by the time I was done with the value of the call option, I didnt bother to complete the put option! My figures were just going bunkass today in that Q1. God knows I seriously need help!
For part 1a, please was that revenue, cost and financial synergies?? The reason why Nahara co would want to diverfisify risk and acquire undervalued companies?
As per WACC combined, I didnt know where it fitted into any of the requirements, nevertheless I calculated it still.
If they said this examiner is better than the previous one, then I must be missing the correct definition of ‘better’ cos I thought it meant questions will be ‘doable’!
Enough said!
Hi Gold50,
Thanks for your message. Some people have asked the same question via inbox so i’ll just post my study pattern that i sent to them, they are probably things that you already know. I apologise in advance if it’s incoherent, it was typed in a rush…so here goes:
1.) Cover the syllabus as much as you can, as early as you can and make sure you understand all the technical bits.
2.) Take tuition if you think you are struggling with self study, I find that the tuition classes&revision really helped me a lot because i could approach my tutors one-on-one when I am unable to understand a topic/question, I also did questions from my revision kit ahead of the next class and gave to my tutors to mark and give me a feedback (especially for P3).
3.) Have a study time-table (do like a week’s worth for a start) with topics and questions that you must cover every day (don’t try to do too much at a stretch but please be consistent with your reading plan, also be as realistic as possible i.e don’t set a goal to read 5 topics + 7 questions in one day, you simply won’t achieve it and you might get discouraged in the process). Evaluate your self from time to time to know what your weak areas are and fix them.
4.) Practice! Practice!! Practice!!!…past papers, I cant over-emphasise the importance of this! Question practice helps to understand the questions asked, improve your time-management and build your writing speed. Also, I find that for SOME papers the most recent past papers (say 5 years till date) are more representative of the manner in which the examiner examines so i focussed on them more.
5.) Always have an answer plan. This is particularly useful for P papers (especially P3, P7 and even P1). Don’t just dive into writing up your answers, think about what you want to write and how best to write it in the time available. For P3, it’s one sentence per mark, so you have to keep it brief but sensible. Be wary of dumping all you know on the answer booklet, for one it might be irrelevant plus it might not be worth more than a mark.
6.) Read technical articles and examiner(s) answers + feedbacks. These will give you insights into how the examiner thinks and the quality of answers that are required. It also helps in developing your answer plan.
7.) Always keep your reading alive in your mind. I try to always think about the topics i read as much as possible so i dont forget it. When i read and leave it for a few days, i tend to forget so i constantly think about it, sometimes I stick proformas, technical points etc on my bedroom wall just so its the first thing i see when i wake up in the morning or before going to bed at night.
8.) I don’t know how this may sound but i’ll write it all the same. PRAY!!! that after you have done all these, that God should help you achieve success in your exams. It works!
Wishing you all the best!
…sorry that i wrote you a long epistle.
@oluwamayomiwa said:
This is amazing, u wrote 4 at once and passed all. This is a Nigerian name, where in Nigeria do you stay and are these you final papers.I wld assume ur question was directed at me as I wrote four professional papers (P1,2, 3 and 7) in June and I passed all to the glory of God (apologies if it wasn’t, guess I’m still over the moon!). I never believed it was possible to write four F papers at once and pass all, let alone P papers but here we are, anything is possible!…Yes, I’m nigerian and I study with lsbf here in the UK. I have one more paper (P6) to go. I began this journey three diets ago i.e June 2013…I must say its been incredibly challenging but worth it. I look forward to being invited to membership after December exams (hopefully) if I get to sort out my PER in good time.
Passed all four papers in one sitting, first attempts…P1 72%, P2 60%, P3 80%, P7 56%…I’m most grateful, I almost lost my mind preparing for these exams!!!
@Faizan, okay good! Fingers crossed! I have passed all my 5 F papers on first attempts as well, 3 of them with 70+. p7 is my first P paper and I am just praying to God for help to pass. Since you did 100%, chances are you would have said enough VALID points to atleast get 50marks. Again, fingers crossed. Let’s look forward to celebrating in August by God’s grace! Cheers.
@Faizan, you mean you did all that in 63mins for Q1?? If you attempted atleast 90% of the paper within the 3hours, then I must commend you, you must be a fast writer! I couldn’t take that risk cos I didn’t think there was sufficient time for the paparazzi, had my techniques in my head which I wrote down in the 15mins reading time for all the questions…as soon as I heard start I just dived in! I did the To, From, Date, Subject, Introduction and Conclusion…no planning on answer sheet! You should get atleast 3 out of 4marks for what you described up there #myopinion…but then what do I know?
The exam was extremely time pressured as there were a lot of things to write!
Q1… as soon as I saw that auditors were appointed recently I went into ISA315 and talked at length about the need to gain an understanding of the client in order to assess the risks of material misstatements…such things as nature of operations, ownership and governance structures, internal control, financial performance measures etc…needless to say I was overly obsessed with ISA 315 that I didn’t have sufficient time to really go into the financial statement risks.
I managed to mention the associate classification could be a risk as 25% isn’t sufficient unless management can demonstrate significant influence! Also, inventory transfer within group is intercompany, shld be eliminated, NRV = zero, risk of overstatement, not correctly recorded, inventories in transit…new system is a risk because if it’s not integrated into sales/ general ledger, errors could arise, investment properties must fulfill ICE criteria (especially as it’s overseas we can’t verify if it’s empty of the group, hence classification might be wrong), forgot to mention FV as a risk! 200 stores is definitely a risk as we can’t attend stock counts and we may not have sufficient time and resources to gather enough evidence as per these stores!.
I didn’t calculate ratios so my question paper was clean & untouched on the numbers bit. But I mentioned that revenue was a risk as bonus is dependent on it!…I thought the 800k management charge was subsequent event IAS 10 (due in September), I bet it was only me that thought that (dumb maybe!)….
Q2. PFI was basically things like fees, threats to objectivity, risks, financial health of client, who the report is for( we may be held liable if client defaults on interest and principal payments as bank would be relying on forecasts) etc…. Procedures was mainly analytical and enquiry as they are just forecasts although some of the figures may be actuals like rent, staff salaries etc.
Money laundering, remembered only placement and layering but still mentioned the transfers overseas….
Other sections were fairly okay but time was seriously not my friend!
I thought the q3a was a bit tricky and it needed a provision (may be for decontamination) which should be present valued, research costs should be expensed as incurred. Didn’t know how to deal with the 60k ppe so I left it…
Car to FD is related party transaction that shld be recognised at 75k and not 50k…disclosure also required!
That’s how much I can remember for now.
I am seriously hoping that I atleast get more than enough marks to pass by God’s grace!
The shares gift was diminution in value principle which is done by calculating the value of the shares using the percentage holding before and after the gift, then finding the fall in value I.e costs of gift.
@Sanjay, thanks for your comment, I feel somewhat better now. Does anybody think deducting £250 (small gifts relief) from the £400 PET was the right thing to do? My friend told me that was what he did. I don’t know if he was right or wrong. I deducted the annual exempt amount of £3000 from the £400 PET and used the remaining £2600 on the next PET. Again, I don’t know who was right or who wasn’t.
Well, I think if the father had disposed the shares and gave cash to his son, then the gift would have been exempt from CGT because it is cash. Or am I missing something? Isn’t PET in IHT? Was the question about shares gift not part of the CGT bit?
Well, I think tif the father had disposed the shares and gave cash to his son, then the gift would have been exempt from CGT because it is cash. Or am I missing something? Isn’t PET in IHT? Was the question about shares gift not in CGT?
something unbelievable happened to me today in the F6 exam. I completely FORGOT question 1 d on VAT!!! A whole 12marks question. To think I had scribbled the answers on the question paper during the 15 mins reading time but I was so engrossed doing the others that I forgot there was a question on VAT. I only saw it when time was up. I was busy struggling to get the partnership bit right while there was some 12cheap marks on VAT. I still feel as gutted as I felt when I left the exam hall. I hope i’ll be able to sleep tonight. I pray and hope to God for the very best in this paper as it appears its only God that can help me at this point.
<cite>@danf1981 said:</cite>
You can’t take bonuses from the reserves!! Thats theft and fraudulent! I doubt the shareholders of the company would be too happy!You are very right! Wasn’t thinking properly cos of the time pressure, it only occurred to me a few seconds to the end of the exam…by God’s grace I won’t be on the margin line as I did almost all other adjustments correctly but for the pre and post acq I mentioned before (don’t know if i was right or wrong). Hoping for the best.
I’m wondering if anyone did what I did in today’s paper for pre and post acq reserves in Q1…. We were told (4000) was the opening balance as at 1st April, but when the sub was acquired it had made a loss of (2000) which means a running total of (6000), then the profit for the year was 8000 meaning the remaining half of the year must have been 10000, but for the post acq reserves I put 4000 as this was the running total on the original SFP in the question (that is (4000) + 8000)….I bet I was wrong going by what people have written here so far.
Also, did anyone do the splitting between OSC and Share premium for the new issue of shares to acquire the sub?
Unfortunately, I treated the director’s bonus as if it was paid out of retained earnings so I took it to SOCIE cos I had never come across a provision for director’s bonus in past papers… I’m just hoping for the best in the exam, hopefully all will go well.