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@ nwafor samuel prince this is purely a coincidence … the coupon rate is given to calculate the interest but however for e.g the debt might be redeemable in 10 years, the cost of debt is used calculating 10%… often it is based on the years the debt is redeembale…
but let me tell you one thing, the DFs that are used to calculate the cost of debt is purely a guess… u must guess a % that will give u a +ve NPV and one which will give u a -ve NPV.
I hope you’ve understood what I trying to say!! 😀
@ jimama I think the reason behind this is is to take into account all cost and we replace the assets in the year which we have the lowest EAC…
@nadine1983 use 1% then… the thing is that we have to guess two DFs, one which will give us a positive npv & one which will give us a negative one… so why not choose 2 percentage which is completely different… as I’ve said try 1% DF, you’ll see the effect by yourself!!
then I’ll answer it with a big smile!! it may true what u have said but some friends on the ACCA facebook page told me that there’s no fixed percentage… if u obtain a +ve npv, u should use a bigger DF to obtain a -ve npv (to make sure u obtain a -ve npv, u must use let say twice the 1st DF… so if its 10% n its give us a +ve npv, u use 20%)n then u compute the IRR…
quite an awkward situation I’m in… I ask 4 help n then I begin explaining it myself!!! but that’s what some chat-mates told me n I hope I’ve got it right…
I checked the syllabus but it is not mentioned in it…. it only says investment appraisal techniques!!
@ joannemcdonnell what you can do is put it on the calculator like this:
(3/4 x transaction cost x variance of cash flows)^(1/3)
…and then the figure you get, you multiply it by 3for instance in example 3:
(3/4 x 5 x 2000² ÷ 0.00014)^(1/3) = 4750
…then you take 4750 and multiply it by 3, you will obtain 14250I agree with kiwitoby… if u r using OT notes, u’ll not find it boring cause it uses a very interesting lanaguage and it provides you just what u need to know for F8 (not too much nor too little)
concerning the errors, I’ve found none yet cause I’ve just started… maybe moving on I’ll find some and I hope its just concerning the grammar, not the essence of a topic…
SO HOLD TO IT GUYS, DON’T LET THE ‘BORED FACTOR’ TAKE OVER YOU!!!
I know Open-Tuition notes are not study texts but I’ll b using only these notes for F4, F8 & F9 for the December exams session…
@ admin do you think using these course notes and practising lots of past papers would be enough to get prepare for the exams?? reply quickly Sir… thanxxs!!failed miserably with 38% only… had to self-study it in just one week, had to eliminate chapters which appeared in the exams n on top of it due very limited time for the preparation, had not learnt at all the names of the case law and had not practiced any question… with all these constraints, it was more obvious that the results were going to be in the negative rather than positive… very awful feeling… had not fail even once b4 but scored an average 70% for the level 1 papers. But the lord brought a small smile on my face with the 50% I achieved in F5 which I studied in worser conditions than F4… QUITE A MIXED FEELING NOW 🙂 🙁
Had only one week to learn and prepare for F5… thought I had fail after the answers were published cause I’d made a mess in the linear programming question and the last question… but by the help of the ALMIGHTY I made it. I’ve got the 50% required to pass, just the required 50%!!! thanxxs also to OT for the help
@ individual there are only 3 levels but 14 papers (with 2 optional)… I guess what u wanted 2 say is 9 papers n not 9 levels!!!
I think that I should get at least 50%… I may b wrong also… I pretty well-managed to answer all questions except the last part on linear programming and the trasfer pricing which I didn’t learn at all; however I managed to answer the theory part on the transfer pricing question… just hoping to be a bit above or simply on those 50%. so good luck to all of you out there, n to me also!!! 🙂
