Forums › ACCA Forums › ACCA AFM Advanced Financial Management Forums › *** ACCA P4 December 2017 Exam was.. Instant Poll and comments ***
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- December 8, 2017 at 10:22 am #421481December 8, 2017 at 4:01 pm #421941
p4 was a disaster for me….couldn’t attempt 6 marks question (Macaulay duration). others were inadequately attempted.
December 8, 2017 at 4:10 pm #421943My last ACCA exam and by far the hardest I have done so far.
Question 1 being on corporate reconstruction threw me, I was so unsure about adjusting the coupon rate and the new value of the bonds…
Then the Macauley duration part?
I ended up doing questions 2 & 4 then coming back to 1 to avoid sitting in the exam panicking the whole way through.
December 8, 2017 at 4:13 pm #421946I had no idea what Monte Carlo simulation is, ended up writing few sentenses about simulation in general. Luckely it was only 5 marks and remaining was my favourite NPV.
December 8, 2017 at 4:14 pm #421947Q1 was laughable…. a very tough question.
I did Q2 MIRR, IRR, VaR + RA WACC, not too bad on that.
Q3 a straight financial analysis – ratios and comments, not expected at P4, wasn’t as technical as expected.
But that Q1 ooooffff a shocker 🙂
December 8, 2017 at 4:27 pm #421956Same.
i was expecting the curve yield topic because the technical article on it was updated november 2017 but i was so confused in the exam and didn’t know what we were meant to estimate exactly?
change in value and coupon rate? wasn’t sure if we were meant to mathematically work out the coupon rate.so frustrating cause now when i think of it i feel maybe given more time i would’ve been able to attempt it.
didn’t touch the mcaudly duration question as i had no idea how to do it (only studied it ages ago)
question 1 was horrible i couldn’t estimate anything at all.
really frustrating 🙁
@mbarrington said:
My last ACCA exam and by far the hardest I have done so far.Question 1 being on corporate reconstruction threw me, I was so unsure about adjusting the coupon rate and the new value of the bonds…
Then the Macauley duration part?
I ended up doing questions 2 & 4 then coming back to 1 to avoid sitting in the exam panicking the whole way through.
December 8, 2017 at 4:27 pm #421957AnonymousInactive- Topics: 0
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Q1 The hardest toughest question in the paper I feel
Q4 Even the forex is also bit tough
Q2 NPV was far better question
December 8, 2017 at 4:29 pm #421958AnonymousInactive- Topics: 0
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My NPV was $ 1169
IRR 15% MIRR 14 %
December 8, 2017 at 4:29 pm #421959AnonymousInactive- Topics: 0
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RAWACC aproximately 12 %
December 8, 2017 at 4:33 pm #421962AnonymousInactive- Topics: 0
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I was so sad by looking at Q1 A really very horrible question one can’t even imagine that
December 8, 2017 at 4:34 pm #421964AnonymousInactive- Topics: 0
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Q1 a. Takover bid i think
Q1 b. Yield Curve Bond Valuation
Q1 c. Duration after calculating b
Q1 d. Balance Sheet
Q1 e. Writing on the basis of a,b,c,d WOW all went wrong from point b onwarddid some calculations only guess…..
Q2. NPV, IRR, MIRR, VAR, WACC + writing again WOW
Q3. Ratios + writingAll that in 3 hours out of which spend 60m reading to question paper
December 8, 2017 at 4:39 pm #421967@mansari said:
My NPV was $ 1169IRR 15% MIRR 14 %
I had exactly the same $1170 NPV – accept the project.
IRR was 0.5% under the required – shouldn’t matter because IRR is not an absolute measure of return.
MIRR was 0.5% greater than required and is a much more accurate measure than IRR – accept the projectIm glad someone else got these answers 🙂
December 8, 2017 at 4:40 pm #421969Q1 seemed quite unbalance for 6 mark to calculate Macaulay for bonds with coupon and for bonds/loan amortizing for 5 yrs (too much time to do the CF of interest on amortizing loan) – interest and equal installments, I wonder what was they wanted to test, if you know the model you know it for coupon and amortizing.
For an expert level I thought they would like to test our capability of providing strategic advice but instead I crushed my brains and my fingers on number crunching…while only residual time was spent on interpreting the figures (not that I was not capable on analyzing but did not have time to do that especially in Q1 – attempt lastly.
Overall I did not find the exam intellectually challenging, it was quite easy. Here is the summary how I remember
Q1: lightly leveraged company that undergoes 2 potential projects both involving borrowing EUR 1245 mio (figure might be dif but size is correct) 5 yrs to either
buy shares (traded at USD11 per share) and then cancel them off or invest in a venture, to calculate the existing bond (5,2 coupon 3 yrs) current value considering that the external rating will fall from A to BBB due to borrowing and post tax cost of capital 12%, then to calculate the new bond coupon/yield considering the the current gov yld and margins all 6m
Then for 6 m Macaulay for new bond with coupon and amortizing for 6 marks;
Impact on FS, EPS and Gearing of the two scenarios for 11 marks
Impact of the above issues on company, shareholders, equity holders..etc for 16 points
Appraisal of one of directors intention to increase borrowings as a takeover defense and for tax saving – 6 points.
Q2 calculation against a given target of NPV, IRR, MIRR, VAT 97,5 confidence level and comments on how these models are considering risks, 25 marks
Q3 Pure ration analysis, B/S an P/L given, dividends, share price and for 20 marks analysis. It was supermarket chain ranked 3rd into the market and also requesting to indicate what are the other info needed for completing the analysis, all of this for 3 ys
For 5 marks to indicate what are the main sources of finance available for this co (the cash increased in the past 3 yr).
Too time pressure exam all in all.
Cross fingers for you guys, I hope we pass!December 8, 2017 at 4:43 pm #421973Q1 was tough but i think i wrote enough to gain some marks, done several different calculations for the current and new bonds etc. Plus i think my format and layout would achieve the full 4 professional marks… which could be the deciding factor!
Done Q2 and Q3, of which Q3 was an absolute godsend! More like F9 stuff. Basic ratios ROCE, GP%, OP%, Div cover, Asset T/O, Share price changes, Gearing, etc… Then to discuss the ratios is basic stuff really. Excessive cash surplus’ in this scenario? Could have been better utilised investing in other projects to earn greater returns for S/H’s?
Q2 & 3 may have saved the day, ill be surprised if anyone enjoyed Q1 😀
December 8, 2017 at 5:33 pm #422019Disaster! There was a massive traffic jam on my way there so arrived 20 mins late and panicking. Q1 was very confusing – I thought mark allocation vs time was terrible. I did q4 and then started q3 with 15 mins to go. I’ll definitely be rewriting in March but good luck to everyone ?
December 8, 2017 at 6:39 pm #422064Did you use after tax cashflow for IRR and MIRR or you deducted tax. I used the cashflows directly without recognising tax.
December 8, 2017 at 6:40 pm #422067I got a NPV of 3,018. Clearly I did something very wrong
December 8, 2017 at 7:04 pm #422074Q1 was very difficult and what made it even more difficult was that it was all about bond calculation and interest for at least two parts. section b was not bad …
December 8, 2017 at 7:52 pm #422083AnonymousInactive- Topics: 0
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@cm69170 said:
I had exactly the same $1170 NPV – accept the project.
IRR was 0.5% under the required – shouldn’t matter because IRR is not an absolute measure of return.
MIRR was 0.5% greater than required and is a much more accurate measure than IRR – accept the projectIm glad someone else got these answers 🙂
Question 1 was a real shocker got the same answers for question 2
December 8, 2017 at 8:35 pm #422091Hi
Can anyone tell me what they did for question 4?, did you convert back to Euros to then calculate dollar forward and options? I started it at 12.30 and realised I should have done question two but too late – think I completely mucked it up, hoping question 1 and ratios was good enough to pass although I had no idea about the maukaly duration except to do it the same as project duration but it was only 6 marks I think and I answered all the rest ok I think.
Could not even think for the first part what the basis difference was and it must have been easy to figure out for three marks. Think it be lucky to get 9 marks for the whole question.
ratios just seemed to easy thinking I must have missed something – what did you put for raising additional finance.?
I thought question 1 was ok apart from the Macaulay duration.
December 8, 2017 at 8:35 pm #422092How did you guys arrive at this figure?
What did you do for the year 1 and year 2 tax losses? Did you add back the tax credit on the cash flows?
Did you add it back as a tax credit so that there was a nil effect since it really wasnt a cash flow?
Based on the answers I believe that is what is causing my NPV to be 3,013 million versus this 1170 that everyone is doing. since I belive it was 2,230 in year 1 and a smaller amount in year 2. That times the Cost of Capital of 12% would have made the difference
December 8, 2017 at 8:42 pm #422096I thought this was a fair exam,
Q1, the topics were a little unexpected to say the least. Bonds are hardly a massive part of the syllabus, I never would have guessed that there would be so many marks in Q1 on bonds. I didn’t worry too much about what I actually got for the computations, hoping for some follow through marks and those presentation marks.
Q2, I thought was a fairly straightforward investment appraisal question. The only thing which threw me was the bit about taxable losses being refunded, just because I hadn’t seen it before and wasn’t sure how to treat it. I just guessed at it, but my answers felt a little off (what did everyone else do here?). And I didn’t attempt the 5 marks on Monte Carlo simulation, I just didn’t have the knowledge (who does?!).
Q3 looked like a pretty generous question on ratios (think it said 10 marks were available for calculations alone!), it must have been pretty simple to get more than 50% here. In retrospect, maybe I should have picked this question instead of Q2.
I surprised myself by choosing Q4. Besides Fx hedging being less common in questions than interest rate hedging, it was a pretty standard, “compare the results from a forward hedge, futures hedge, options hedge, and recommend a strategy” question. There wasn’t much in it that was tricky.
Q1 was an oddball, but I think the Section B questions were good questions. Better questions than the last time I sat this paper anyway.
December 8, 2017 at 8:47 pm #422097@christa316 said:
How did you guys arrive at this figure?What did you do for the year 1 and year 2 tax losses? Did you add back the tax credit on the cash flows?
Did you add it back as a tax credit so that there was a nil effect since it really wasnt a cash flow?
Based on the answers I believe that is what is causing my NPV to be 3,013 million versus this 1170 that everyone is doing. since I belive it was 2,230 in year 1 and a smaller amount in year 2. That times the Cost of Capital of 12% would have made the difference
I got 3000m odd too for the same reason. The question definitely said the taxable losses were refunded in the same year so I added the taxable loss back to essentially cancel out the cash flow. I thought it was weird that the government would essentially be paying the company for making a loss but I couldn’t find any other way to interpret the question.
I too would be interested to hear from the people who got 1000m odd on what they did with the tax losses.
December 8, 2017 at 8:51 pm #422099Hey Thank you. My IRR was oddly high as well.
Like it was insanely highly. I used 20% and I was still getting a fairly positive number.
December 8, 2017 at 8:54 pm #422100I added back the losses to balance the cash flow. It would have been similar to when they say that it would have been utilised against future cash flows. so I used the same concept as if it was like that and when it came to calculating the cash flow, added it back just like how we would add back for the tax allowable depreciation.
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