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ok, many thanks, so if there is no any value of non-tradable debt in the test, then i assume that value is $100 and calculate WACC taking into account MV of non-tradeable debt is $100, am i right?

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I tried to find the example about non-treadable debt, but couldn’t, if it is possible couldn’t you please explain which MV (if any) i should use in calculation of WACC in this example:
A firm has a fixed rate bank loan of $1 million. It is charged 11% pa. The corporation tax rate is 30%.
i would calculate cost of debt as 11%×0.7=7.7%, but how to calculate MV?
Many thanks in advance.

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@marmil86 said:
The money market hedge question led me to nowhere because I couldn’t arrive to the listed options. I know this topic very well and I don’t understand where I was wrong. I had an answer close to $205,… which wasn’t there at all. Again ended up guessing, and as far as I can see in the above posts I made wrong guess …

@Yana

Here is what went wrong for you with market hedge(went wrong to me too the same way, but I managed to get the figure when I read more carefully): you adjusted deposit rate for six months, thinking this was yearly rate…it is not… deposit rates were already given for six months period… cannot remember for borrow rate though…

Thank you very much I really didn’t notice that deposit rate were given for 6 month:(((

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@simchester said:
Can’t remember numbers but 1st I think was asking money market hedge:

Steps
1. Borrow funds in currency which you need the money
2.Translate-exchange the funds today
3.Deposit the funds in the currency which you eventually want the funds until…I think that was 6 months

yes, exactly, i was sure in monye market hedge and did all of these steps but my answer didn’t match with any of the given choices that is why I asked you…

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@simchester said:
F9 was fair…hope to pass

if so maybe you can you tell please the way you calculated the first question concerning money market hedge
Many thanks.

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@bandhi said:
I believe you were suppose to have used Gordons growth model. So payout was 55% and ROCE was 20% therefore 0.45×0.20= 0.09, 45% being the retained earnings, and from there you just applied 0.45*1.09/2.45+0.09 = … or something along those lines, but I might be wrong.

is payout was given? I can’t remember it was… or you calculated it by yourself?

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hi there,
1) the hedge MCQ were ok with everybody? I thought i knew that area, but I didn’t find any right answer in test.

2) In next block, probably 21-26 MCQ when we were supposed to find cost of capital using dividend growth model (there were equity and loan notes or smth like that) and I couldn’t find cost of equity to use it in next question when we were supposed to discount debt (Loan notes or smth). Can anybody share the way you calculated it?

Thanks in advance

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@almoosawi4 said:
Why a lot of people didn’t answer Q4, there was 18 free mak in part A & B(ii)

Part A was from technical articles

Please tell the name of article if you can.

Thanks

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Why a lot of people didn’t answer Q4, there was 18 free mak in part A & B(ii)

Part A was from technical articles

Please tell the name of technical articles if you can.

Thanks

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ok, thanks

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Excuse me, but you don’t know the correct answer how we should have calculated growth in question #4 or 5 in June exam?

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i think there were not some ‘g’ figures, but some dividends figures in some years with different lags between years

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Thanks you very much for your clear answers, I was sure in that calculations, but yesterday faced the wrong answer in BPP practice kit, so I decided i would rather clarify than lose precious marks.
Excuse me again, but may I ask you the correct way of calculating ‘g’ in the latest question in June’2016 exam? There were some ‘g’ figures for some years as far as I remember…. and I am not sure which way of calculation was correst.

Thanks.

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excuse me again:)) but may i ask another quiestions that I couldn’t find in my study books:
1) WC – when we provide discount, f.ex. 1% for settlements during 60 days. Our Revenue before discount is $1 m.
when we calculate finance cost we should calculate AR current and AR with discount. My questions are: a) should we adjust current revenue for discount when we calculate new AR (with discount)? I mean, new AR=60/365*1000000 or 60/365*(1000000-1%)?
and b) f.ex., bad debt (BD)=2% of AR more than 60 days. When we calculate decrease in BD should we use the new AR, calculated based on new Sales taking into account discount 1% or we shouldn’t take into consideration 1% discount when we calculate AR and BD and take it into account only when we calculate amount of discount=1%*$1m=10000?
2) Investment appraisal. When we calculate tax relief am I right that every time we can start depriciate and hence claim reducing balance only from the next year after investments? I mean we should invest $100 today, in period T0, but despite the tax payment terms (in arrears or the same period when profits are earned) we can claim starting from the next period, T1 and so we can get first tax relief either in period T1 (in case when tax paid when profit is earned) or in T2 (in case of in arrears) and never in period T0, am I right?

Thanks in advance.

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sorry, I meant June… There were some ‘g’ figures for some years as far as I remember…. and I am not sure which way of calculation was correst.

Thanks.

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Excuse me again, but may I ask you the correct way of calculating ‘g’ in the latest question in Jusne exam? I also doubt whether I was right…
Thanks in advance.

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many thanks for your quick response, be honest I slightly remember that question, I have just today recalled that there was a weird quiestion in June exam with perpetuity and yes, there was a negative NPV for that period that was given, but after that the NPV was positive and i didn’t know the way of correct answer… Thanks again. I hope this exam will be easier for me:)

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no need to use root?

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how did you calculate “g” in valuation question, dividend growth model?

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excuse me guys, but I can’t see the test, can you help me pls?!

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@gonko said:
Material x took 1 kg of A at 1.60.
2kgs of B at 1.50.
2 hours labour at 12.00 per hour.
3 hours machine time at 80c per hour.

Total 31.00

Anybody remember the case relating labour? Why everybody got 8 per hour while I got the same like here – 12 per hour:(((

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I would like to look at this task (Q2) particularly after reading technical artical part 2, as it a fresh look:))

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Does anyone remember Q2 with a table? I would like to complete it but can’t remember the case…

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