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In q32 b) you should choose the optimal combination from 5 projects that combined give the highest NPV.
For business risk and financial risk you needed to write about how business risk is measured by operational gearing (contribution / PBIT I think) and that there’s always going to be business risk but it depends on the type of business etc. Financial risk is measured by financial gearing (debt/debt+equity) and I wrote about some of the theory’s – traditional theory and M&M etc. – although not sure if I went into too much detail.. can’t remember how many marks it was for but I’m confident I covered everything 🙂
@beckyspace said:
Section C was like Merry xmas enjoy so not difficult.
but MCQ was like f***** it! I didn’t have a clue so guess my way through them.
Because I guessed them had plenty of time to memorised them as below:
1 A 11 A 21 A
2 B 12 B 22 B
3 D 13 C 23 B
4 C 14 C 24 A
5 C 15 D 25 B
6 C 16 D 26 A
7 D 17 D 27 D
8 A 18 C 28 C
9 C 19 D 29 C
10 c 20 A 30 DI also did noticed MCQ 27 partly answered one of the section C question on two ways of incorporation risk in to investment appraisal.
The answer was probability and sensitivity analysis.
for the NPV I had a very huge figure like never before which made me think I had done something wrong but looking at the NPV values of the subsection b which was about PI I concluded i was probably right.My Wacc was 10…. something.
the business and financial risk wasn’t quote sure what to write any one?@sophierayner said:
For business risk and financial risk you needed to write about how business risk is measured by operational gearing (contribution / PBIT I think) and that there’s always going to be business risk but it depends on the type of business etc. Financial risk is measured by financial gearing (debt/debt+equity) and I wrote about some of the theory’s – traditional theory and M&M etc. – although not sure if I went into too much detail.. can’t remember how many marks it was for but I’m confident I covered everything 🙂It was for 4 marks I think
I thought it was ok today but where the hell does he get some of those MCQ’s from, particularly the wordy / sentenced based ones… I must have covered 300 during revision and still at a loss on some?
Again MCQ’s were random and really hard, this paper is 60% multiple choice so no marks for workings, I have done so many test papers for mcq’s and Kaplan exam kit but still these were hard, & really unfair
My WACC I got was 8.36% think I mucked up on pref shares as most ppl seem to have 10.6 %
My NPV was positive 1247 I think, and I did include the fixed costs, was I wrong to do so ?
Rights issue I talked about how it works and shareholders can sell right V doing nothing and how equity finance should be last decision in pecking order theory etc,business risk I talked about obselesence etc finance risk I talked about capital structures in business and how poor finance management can lead to business failure.
2 way to measure risk I put expected values and probability index not sure if I was right their.
capital rationing hard external by banks etc soft internal restrictions etc
Again MCQ’s a nightmare, feeling really deflated as I think mucked up on forex questions which I was fine with before the exam!
I am really hoping I passed as second attempt,
what did everyone get for NPV?
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
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.
I had exactly the same with the hedge, the answer wasn’t there…what did everyone else think?
I agree with your cost of equity, cost of debt, cost of preference share and cost of bank loan, but my WACC is 10.81%
Money market hedge, I had the same problem and I was quite sure I was doing it right!!
@sokty said:
my money hedge is around 201kI heard that was correct. I guessed it.
A 197
B 201
C 206
D 210@dreamersk said:
I wonder how marking will be for NPV…seems I shouldn’t have included fixed costs, should have included tax savings at the start of year. If tax was in arrears I think end of year 1 is fine but not sure, maybe end of year 2. Seems I added Npv incorrectly. If those are my only mistakes, I think I will get around 5 or 6 for the question.@dreamersk said:
what was the answer to the MCQ about annual cost if you do not take the discount rate?@dreamersk said:
Was there an MCQ that had the answer…..price is random walk and investors not rational?@dreamersk said:
How did you calculate the operating cycle questions? What was the reduction? Do you remember the number and answer?@dreamersk said:
How many marks for WACC and others in part CWas WACC 8,9 or 11 marks?
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