*** ACCA F9 September 2016 Exam was.. Instant Poll and comments ***

@ch305 said:
How did you calculate the savings from EOQ?

I did the formula so

2x480kx248.44/1.06

Came to a re order every 15k units or so.

They were holding too much stock a time

@james1114563 said:
Yeah it was like half as the rates for a year, 1.56 something I think yeah for the six month forward rate

Phew that’s a relief 🙂

@suf23 said:
How did you guys answer the CAPM Q in Q #32 (part B)?

I wrote about the use of the average asset beta formula to calculate a project specific discount rate using CAPM. Risk can therefore be incorporated resulting in better investment decision. And gave 2 brief disadvantages of asset beta formula and one disadvantage of CAPM. What about you?

CAPM was super easy!
Just explained how it can be used and wacc becomes irrelevant when existing capital structure changes or investment in different markets.
For hebac co. CAPM equity would have been much better than wacc.
Also, just explained how to use capm and asset beta etc

@complicated

I waffled on about isolating business risk on the new market, and then using company’s gearing to get equity beta….

@leahedwards1

Yes!
At first, I used the $ value. Then five minutes later, I was like wait what…

I then divided by unit price like you did.

EOQ gave 15,000 iirc

@leahedwards1 said:
I can’t remember the exact figures for EOQ but it confused me a little as they gave the demand as a $ value and so I divided the value by the unit price to get the annual demand – did anyone else pick this up?

Yeah so I did the value did used that to get a demand of 480k units

@leahedwards1 said:
I can’t remember the exact figures for EOQ but it confused me a little as they gave the demand as a $ value and so I divided the value by the unit price to get the annual demand – did anyone else pick this up?

Yes. I realised it too..

@karanpreetrobin said:
CAPM was super easy!
Just explained how it can be used and wacc becomes irrelevant when existing capital structure changes or investment in different markets.
For hebac co. CAPM equity would have been much better than wacc.
Also, just explained how to use capm and asset beta etc

I highlighted the disadvantages of WACC like how it can’t be used if business risk changes or gearing changes or if financing is not from pool of funds and that’s why capm must be used. I didn’t write much about capm other than it incorporating risk. Hope it should do.

I got a NPV of 11.891 million I think it was, i was working in thousands though.
The Eoq was cheaper, the saving I got was 8281, this was same as a question in the exam kit I believe.

For the Rec management, I calc receivables, finance cost and irrecoverable debt for both 40 and 65 days and worked out the difference and waffled about how discounts or factoring could help to reduce irrecoverable debts in particular.

Thought some multiple choice were tricky.

For capm, first specified that capm incorporates systematic risk which Wacc doesn’t. Then explain how you would degear the asset beta as this will be found from external firms as new project and this doesn’t incorporate financial gearing. Then regear with co financial gearing and use capm to get project specific discount rate.

For the scenario based question, in order to find out the 6month forward hedge you’ll apportion the annual interest rate for six months right??

@arun12345 said:
For the scenario based question, in order to find out the 6month forward hedge you’ll apportion the annual interest rate for six months right??

Yeah, pro rata by 6/12