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- This topic has 146 replies, 46 voices, and was last updated 8 years ago by syed.
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- September 9, 2016 at 6:49 pm #339527
@aadjazz said:
In Section C, Q32, NPV Question, it stated that investment as well as WC was at the beginning of the first year of operations so I understood that should go to YR1 instead of YR0, anyone with the same?I didn’t do it this way, as cash flows that arise at the start of the year should go to Yr0. Only cash flows at the end of the year should go to Yr1.
September 9, 2016 at 6:50 pm #339529AnonymousInactive- Topics: 0
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I can see I just made a silly assumption!
September 9, 2016 at 6:52 pm #339531@trevon2020 said:
The EOQ questions (A) asked about whether the company sold take the settlement discount offer by the suppliers……why did they give the company credit sales?That was a ‘distractor’ and unrelated to part A. But i did use that to calculate interest costs and bad debts for part C
September 9, 2016 at 6:52 pm #339532@carolita1 said:
What was the mcq correct answer for the market value of the 3 % convertible loan note?I coudnt get it.It was the $77 answer, which was the cash option rather than the conversion option
September 9, 2016 at 6:54 pm #339534AnonymousInactive- Topics: 0
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I seem to remember the convertible option was better than the cash, $114 vs $100?
September 9, 2016 at 7:01 pm #339535AnonymousInactive- Topics: 0
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The EOQ saving, do you remember the numbers behind it?
September 9, 2016 at 7:05 pm #339536@aadjazz said:
I seem to remember the convertible option was better than the cash, $114 vs $100?I got conversion value of $114 too and so conversion will be likely.
September 9, 2016 at 7:07 pm #339537i got 15,030 exact figure
September 9, 2016 at 7:10 pm #339539Just wanted to make sure I didon’t misread the question cos I did that for question A….it was a really tricky questions though
September 9, 2016 at 7:11 pm #339540yes i wAS wondering WHY my NPV was so large. I as wondering if i did something wrong mine as 13 mil but i only realised the scrap value at the end so my end figure would be wrong
September 9, 2016 at 7:23 pm #339547i got a 5% growth
September 9, 2016 at 7:26 pm #339548Mine was also 11000
September 9, 2016 at 7:34 pm #339550I think I got about 13 million as well!
September 9, 2016 at 7:57 pm #339553When you inflated the value of the shares did you then also discount using the cost of capital %? The conversion would occur in 5 years time so should’ve been discounted by 5 years.
September 9, 2016 at 8:05 pm #339554@accastudent1986 said:
When you inflated the value of the shares did you then also discount using the cost of capital %? The conversion would occur in 5 years time so should’ve been discounted by 5 years.I don’t think you need to discount them since the redeemable value in 5 years time is the nominal value. The values can therefore be directly compared
September 9, 2016 at 8:07 pm #339555Correct answer is money market hegde lol
Because you can’t hedge interest rates and you can only hedge interest payments etc.
So curreny futures, options and forward agreement will hegde interest rate issuesSeptember 9, 2016 at 8:08 pm #339556@complicated said:
I don’t think you need to discount them since the redeemable value in 5 years time is the nominal value. The values can therefore be directly comparedBut the question stated that the market value of the shares were $3.6 each and would grow by 4% per year for 5 years. Therefore the future value would be $3.6 x 1.04^5 but the question requested the current value so you should discount the future value
September 9, 2016 at 8:09 pm #339557AnonymousInactive- Topics: 0
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@accastudent1986 said:
When you inflated the value of the shares did you then also discount using the cost of capital %? The conversion would occur in 5 years time so should’ve been discounted by 5 years.Yes, and so the $100 nominal as both will happen in the future.
Basically what I’ve done was comparing $100 nominal conversion in the future vs value of the shares in the future (around $114), as value of the shares in future will be higher, the will convert at that point, so took that figure and then discount it as part of the whole calculation to bring it to today’s money terms. I hope it makes sense.
September 9, 2016 at 8:09 pm #339558and it said repayment option would be at par and not the conversion option
September 9, 2016 at 8:13 pm #339559Hi hope all well did any one remember anything about MCQ my most answer were C does any one have same? Section B and C were fine speculation part C but part A was really tricky
September 9, 2016 at 8:18 pm #339561AnonymousInactive- Topics: 0
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@accastudent1986 said:
and it said repayment option would be at par and not the conversion optionreally? I don’t remember that bit, it would seem quite silly considering the conversion option was better in terms of value though.
September 9, 2016 at 8:21 pm #339563Overall it was not bad. The multiple choice questions were trickyyyyyyyyyyyy
September 9, 2016 at 8:25 pm #339565Can anyone tell me the right answer for one question on four equivalence theory??….the mcq question
September 9, 2016 at 8:26 pm #339566Section C was fine for me. The discount got $2000 benefit, the EOQ was 8280. Got about 11m in my NPV. the capm was on ungearing and regearing the asset beta. Section B of 21-25 the business valuation question was cool. Section A was tricky. Keeping fingers crossed
September 9, 2016 at 8:34 pm #339569that question on EOQ threw me off. thankfully it wasn’t linked to the other 2 questions.
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