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(a) Discussion on CEO/chair views(5)
(b) Report, that (i) calculates APM (16) and comments on the results (4)
(iii) Explain assumptions (5)
(-) Compare APV to NPV. Describe fallbacks of APV. (6?)
(-) When stop non-electic (4?)

Please get back with any split you remember for Q2 Osman/Mehmed.
Or how many marks were available for Q3 ESG discussion (response to critique).

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Hey, anyone remembers marks split for Q2 Osman/Mehmed?

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@agnes4325 said:
Hi All,
If this is of any help. Some facts that I can recall on Question 1 (March 2017 session).
*Please note these details are not comprehensive – just what I remembered from memory and in my own words.*

Case scenario revolves around the State Bank of Forenia (SBF) that is trading in highly risk derivatives i.e loan documents to the extent that the “capital ?? ratio” is below recommended industry average level. The existing auditor had been auditing the bank for 20 years and the audit partner happened to be a good long-term friend of SBF Finance Director who highlighted privately to the Finance Director on the issue. But he still signed off the audit report despite his reservations.
Issue was found out and exposed by a journalist and his reporting triggered mass hysteria and many bank depositors went to withdraw out their money and the bank was unable to fulfil such massive demand of withdrawal and nearly faced collapse. It was bailed out by the government of Forenia with a 49% stake in exchange of cash injection.
Several outcome from the crisis:
i) A tender was opened for services of new auditor.
ii) Board propose for internal audit report to be reviewed by an audit committee before being received by the main Board.

Question Requirements:
a) Explain responsibility of the Board of Directors in internal control by reference to the case.
b) Give reason why it is better for audit committee to review internal audit report before being received by the main Board
c) Explain why it is beneficial to the shareholders to have open tender for external auditor service.
d) Draft statement by chairman to shareholders on following
i) state how the board had failed in its fiduciary duties
ii) < cannot recall >
iii) highlight major risks faced by SBF and what counter measures can be taken

d) ii) Assessing Going concern.

Any insights on the correct answers to Q1?

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Working capital mcq:
AP days = avg AP/COS * 365
60 = 120,000/COS * 365
Cos = 730,000

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I remember mcq on interest on repurchase.

96.5 = 96 * (1 + interest* 50/365)

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@shoaibacca said:
last 20 number mcq how to calculate share price

It was ~$112/100 I think loan note, each convertible for 20 shares.

20*mps=112, mps=5.6 indifference point.

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@mynameisearl said:
Can we list all the mcqs and answers?

If anyone can remember

Agree.

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@mynameisearl said:
Q5 part b i did in perpetuity as it said ‘foreseeable future’ and i got a really high npv. But it really confused me and i felt so unsure if that was the right thing to do.

WACC q i forgot what to do and deducted tax from bank loan interest rate, not sure if that was right.

Q1 – im not sure if what i wrote was ok for overtrading.

Q3 – hedging, the fo was better and about £6k less than the money market hedge.

Mcq – sensitivity analysis i got 10% but felt so unsure as got my self confused with the tax, think i ignored it in the end.

I guessed a lot if the mcqd.

I chose leases for i think it was mcq 1.

Sensitivity was for sales volume. So take contribution. If it was for price, than take sales revenue.
NPV = 200
Sales = 4000
Variable costs = 2000

(4000-2000)/200 = 10%

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@mynameisearl said:
Hi,

The mcq’s were really hard.

There was one i should have known the answer to but could not work it out. The cost of equity. It gave the dividend 10p, p/e 5 times, d/C 4 times. What is the answer?

Thanks

Dividends paid = 0.1.
Dividend cover = eps/div = 4. => eps = 0.4.
P/E = market price per share / eps = 5. => m.p.s = 2.

Cost of equity = dividends paid * (1 + growth rate) / market price per share + growth rate.

I don’t remember exact numbers, but I think growth rate given should have been adjusted for particular period.

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Don’t you remember what exactly the question was?

Expansionary fiscal policy => increase spendings;
Contractionary fiscal policy => reduce spendings;
Expansionary monetary policy => increase money supply;
Contractionary monetary policy => reduce money supply.

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Please, tell the correct answer to 1sr mcq.
And MCQ with mix of expansionary and contractionary policy: increase/decrease gov. spending and money supply?

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