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Much more easier then the previous one. The previous was really inadequate and I’m glad that the ACCA administration has made improvements in the last version.
It was OK, hopefully I did enough to pass.
Anyone remember how was the calculation of the MCQ which asked for the cost of equity?
They gave EPS of 0.80, ROE and the dividend payout ratio of 55% and other dataI think I used g=bre to get growth of 9% and then used the DVM, dividing 80+g by the value of the share plus g to get 28%
Section C was ok, can’t remeber my WACC for 31 but 32 I had NPV of 6+m for nominal capital and 10+m for real cost with the machine paid for in year one and 5m per year depreciation, tax saved of 1.25m. Section A was ok but by the time I got around to section B I had was a bit stale and I forget how tio calculate the value of the 6 & 8% loan notes. Also, the two hedging questions that needed calculating my mind was blank.
I got my Q31 NPV just slightly negative. How’d you guys do? Checked it twice and the NPV still minus (I think its due to the rounding). However i did the real rate by deflating part (a)’s NPV and then inflate it again using the new calculated discount factor, turns out to be slightly positive. Is it even possible?
Ive got NPVs for nominal rate around 84K for real rate around 74K.
I have calculated for 10 years useful life. Did anyone calculated for 4 years??What is the answer for multiple question: If government will increase the interest rate??
A) dont remember
B) shareholders will demand lower return
C) Customers will buy from abroad
D) Company`s exports will increase
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i might sound stupid saying this but i had no idea what the difference between real and nominal methods was, rest of the exam was ok. Hopefully i pass as this was my 5th attempt. ?
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I think it was customers will buy from abroad
You would apply a different discount rate to the calculated net cash flows, in this case the nominal costs of capital was 10% and the real rate was 6%.
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@gdjames said:
You would apply a different discount rate to the calculated net cash flows, in this case the nominal costs of capital was 10% and the real rate was 6%.I thought real rate cash flows were uninflated i.e. contribution & fixed costs. I used the discount rates correctly
Agree with the “customers will buy cheaper abroad” and 2.4 years for the payback.
What was the answer about the risk for purchases abroad (economic / transaction / translation)? I chose “economic+transaction”.
Hey guys, what’s the answer for the commercial paper question?
It was something like: 40 days, 365 days a year, $10000 $9967So for the nominal cash flows, i assumed you had to adjust for the inflation (contribution and fixed costs) and discount at 10%? I remember getting a NPV of 2.294m?
Then for the real cash flows, i assumed we didn’t adjust for inflation and use the discount factor of 6%? I think i got a NPV of 970k?
Also for the WACC did anyone get 12%?
Hits123 I got the same npvs as you! My wacc was 5-6% can’t remember exact.
Does anyone else keep making the mistake of writing £ instead of $?! Do we lose marks for that do you think?
Third attempt at this paper it’s the toughest of the f papers for me, probably drawing with f5!
Was happy to see wacc and Npv as main questions. Struggle with hedging, spot rates and capm!
I adjusted for inflation on contribution and f.costs for nominal and got 6.2m. I think as there were tax saving inflows each year of 1.25m because of the 5m per year depreciation. For the real rate, I messed up and did not remove the inflation from contribution and f.costs so gutted about that.
I think my WACC was 7%
Think I messed up on the ten mark question ondividend policy mind went blank. Looks like it was about Modigliani and miller but didn’t put anything to do with this?!
Interested to see what others put?
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