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It says the fixed was incremental and incremental cashflows are relevant.. I put the whole 700 for yr 1, then deducted yr2 from 1, yr 3 from 2 and So on just as we would treat working capital..
Don’t know if I’m right.
Considering that F9 has such a vast syllabus, I found it quite unfair to be asked to calculate MV or Cost of redeemable loan notes three times in the paper, then barely any questions on working capital…. no modigliani and miller or capital structure theories either… or business valuations except 1 mcq on earnings yield …… so much material to be asked so little …
Kept hearing Mr Moffat’s voice while doing WACC calculation 🙂 🙂 Thanks so much for your lectures.
Let’s hope for the best!
I also guessed most of the MCQs, they were so unclear the wordy ones, some answers I thought irrelevant to the question, some questions I didn’t understand. Much harder than any in the Kaplan kit. The last question on NPV was the better question for me. Inflated sales price and v costs. The bank loan was unclear regarding interest level? I was overwhelmed my the total content of the paper, it was not like any other paper I’ve sat or practiced. Not at all confident and frustrated that I can’t resist it sooner ?
Yes I agree, why was that in the paper 3 times, I felt like that’s all that was in there! No working capital Islamic finance or M&M.. horrible paper and badly written I thought.
I thought the paper was fair. Quite straight forward.
For bank loan i just guessed took the rate from the loan notes.
NPV 10.8m using 12%
Discounted payback 2.9 years
WACC I got 6.5%
Kd using IRR = 5/6%
Preference = 8.1%
Ke = did D1/p (g = 4%?)These exam question are so HARD compare to the kit….its unfair because some of the questions are so different from the kit….I need to get the actual MCQ pass papers ..Does any know where I can down load them…
I did the same – I did the probabilities 65 + 15 + 20. Came to something like 396k so I applied annuity factor to that.
MCQs were awful. So many similarly worded answers that took up a lot of my time.
I inflated selling price and variable cost each year and left fixed costs as they were. Did anyone else consider a balancing allowance in year 4 as 5% terminal value was much less than depreciated asset value? I thought I was being clever!
How much did using a factor for the receivables impact profits by? Decrease of 110k I thought
I got 1.55 for DPP – paid back in year 3 with initial $25m investment start of year 1, with $5m+ left to clear at end of year 2
PLEASE TELL me how you find Market value of convertable loan note in 1st MCQ.
cost of debt was 10%, dont know after tax or before tax.
conversion value was 126. intrest 3%.is the current MV & MV only are diffeent things?
my answers were like AAAA, DDDD ETC
Payback was 2 years 8months.
i also did 65-15-20, cashlow came 396 and then discounted.
i sais efficency input &effctiveness output.
kp was 8% & kd was 23% ke was 6%.
bank loan i ignored in wacc..
But factors would charge 6% instead of 4% of bank for the immediately payment of 80% of 5m receivables.-2% X 80% X 5 M=-80000-10000 fees =(90000)
There was on MCQ with answers of 11.2% and 11.3% and I went for 11.2 after about 5 minutes of checking the roundings! That was a cruel question for 2 marks.
I thought the 80% was irrelevant to the profit because those funds paid by the factor would only alter balance sheet receivables numbers not profit in P&L. So I thought 100k fee plus difference of 6% and 4% of 10k = 110k.
MCQ 1 slapped me in the face! My brain froze and I answered it with about 3 minutes to go to try grab 2 marks but can’t remember my answer – sorry!
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