AFM*** ACCA P4 June 2018 Exam was.. Instant Poll and comments ***

@adolf121 ah, thank you! Then it means that I only attempted 86 marks in total. Now I just wish my accurate rate might be around 60%....

@adolf121 said: 5 marks

@adolf121 my horrible math

@adolf121 said: -(L+0.4%)+L-5% the way you have typed it out the +.4 is in the bracket. So - x .4 = -0.4 giving us an EIR of 5.4%

@finansist for Q2, "FCF for 4 years at a different rate", didn't remember any info provided in the question hinted different rate for cash flow of year 1 - 4. Could you elaborate a bit more? I may totally miss some critical info:-(

@finansist said: Sadly, the areas that I didn't revise and was weak came up. Q1. Got BSOP wrong however NPV calculation was decent. Discussion bit was also good I think I was able to pick up some marks here and there. But just left soft capital rationing requirement completely as I was running out of time. Q2. Was relatively straight forward for me. I am hoping for most marks from this question. FCF for 4 years at a different rate and then two estimates with 5% and 0% growth thereafter. Ungeared Ke and APV calc. Also discussion for reasons for acquisition and disadvantages of asset based and p/e valuation. Q3. FCFE calculation however was a bit tricky because foreign subsidiary involved. Got messed up with calc, sadly. Discussion parts were about dividend policy and increasing dividend repatriation in light of agency theory. Again bit muddled here. Q4. I would love to do this question but was put off as soon as I saw "SWAPTION" in the discussion requirement. Now just hoping for pass...

@adolf121 oh, I see. I got this part, two different rates of CF of year 5 and onwards:=)

@adolf121 said: There were two rates to be used. Clio director wanted to use Zero growth after year 4 and Polymnia wanted to use 5% growth rate to perpetuity. So we had to find two FCFF values.

By the time I finished q1 I only had an hour and few minutes left.. spent a bit too long in q1.. I could barely finish my q4 on hedging.. I think majority of the question was straightforward though.. just so much to read and digest, figure out what and how to do it within a very limited time. How did anybody calculate the basis unexpired risk? I struggled here and just assumed something.. Fingers crossed till July

I attempted 71% and I'm sooo worried. The exam was okay. I wish I scale through. 1b. Got a negative NPV. 2. At 4 percent zero growth value was 43m. At 5 percent to perpetuity about 48m. 4. futures 5.3 percent, but one of the options had 4. 8percent. Recommendation was to go for options since when it's unfavourable you can decide not to exercise. No 1 was poorly attempted.

@adolf121, again rushed a lot in this question:-(, totally forgot to scan MVd of Polymnia during exam, but tried to recall critical info of the question now, don't think that the question provides any info related to Polymnia's capital structure. Not sure why you may try to find out value to equity holders of Clio. Shall try to find out MVd of Polymnia, then get MVe (TMV derived from FCFF - MVd) of Polymnia and compare the bid/ask price to see if the price is acceptable?

@adolf121 said: Did you find the value to equity holders of Clio after finding the FCFF values? If so did you deduct the amount paid to get to the additional value to Clio or did you use the 55% to find the equity value?

@sahil1234, wow, didn't read such in Kaplan kit as well

@sahil1234 said: That swaption question was the most confusing one. I never read about it anywhere in the notes or the BPP kit. Apparently 1x4 at 5% means that it is an option of a swap starting after 1 year for 4 years at an excercise price of 5% fixed interest rate.

@acca145 said: last session p4 was easy, I attempted 75% and still got 50 % first time. good luck to students this session.

I attempted 71%. Time pressure...I hope I scale through.

Ok here goes I did Question 4 - Interest Rate Risk - The futures was unusual as both Future options gave a negate result - the Exercise price was 5.17 and the basis was (.11) This there me a bit but I continued on and did the option which gave a yes or no to exercise answer - anyone else get the same

Is there anybody who fully completed the paper ?? As I didn't !! I left 19 marks straight

@ivonne said: @streetgold yes, 40 basis point need be added on top of base rate to derive the actual borrowing rate for the company when calculating the NCF

hello guys, do you have an idea how much marks we gonna lose if the 40 basis points is not adjusted to the interest rate. And the interest cost (calculated using 5% & 3.4%) is used.

I got the same result - 5.46%

@adolf121 said: Anyone got 5.46% for futures? This was weird. Both alternatives came up with a loss but Effective rate was same tho.

Hello guys.. anyone have some tips on how i can do this paper while studying on my own for the sept 2018 session - how can i go about with this paper.. I am planning on studying with the kaplan book.. any better materials you know?

With today's experience for P4, I would suggest you to go through all technical articles. In addition to that practice past papers & work on time management. Hope it helps.

yes i got 5.46% for the futures

Yep. The df was 11% (11.2). The NPV of phase 1 was around $85 m. Without delay phase II was $(190)m ish. With BSOP phase II was $170000 odd. Anyone else get these figure? Please say yes.

@shivek said: Yep. The df was 11% (11.2). The NPV of phase 1 was around $85 m. Without delay phase II was $(190)m ish. With BSOP phase II was $170000 odd. Anyone else get these figure? Please say yes.

D.f i use is 11% using MM2 to find ke . I use ke since is all equity .. no need to find WACC. I do not understand what u mean by The NPV of phase 1 was around $85 m. Without delay phase II was $(190)m ish. With BSOP phase II was $170000 ?

@gt0707 just a guess based on the marks allocation of similar question in the past, may lose 6~8 marks at maximum if not adding 40 basis points, as such may lead to incorrect calculation of "impact of interest rate increase and decrease with future" (about 3 marks), "impact of interest rate increase/decrease with option" (about 3 marks) and "discussion & recommendation" (about 3-4 marks in total)

@gt0707 said: hello guys, do you have an idea how much marks we gonna lose if the 40 basis points is not adjusted to the interest rate. And the interest cost (calculated using 5% & 3.4%) is used.

does anyone remember the marks allocation for Q2? I messed up badly, sigh

i read all technical articles except the real option one. and it cost me greatly.

I messed up big time too my entire paper was messy, lots of scratches . Started with question 4 hedging strategy ...took too long...did not complete question 2 or #1 for that matter....my final paper and I messed up big time....still hope I did enough to pass

@sharlene17 shake hands.....Same here, last paper, rushed a lot in both optional questions with lots of scratches, plus left 14 marks unattempted:(

@sharlene17 said: I messed up big time too my entire paper was messy, lots of scratches . Started with question 4 hedging strategy ...took too long...did not complete question 2 or #1 for that matter....my final paper and I messed up big time....still hope I did enough to pass

Anyone thought q1 was a put option instead of call option? :/ thought I read somewhere in the paragraph that they can decide to stop further investment after phase 1 if they wishes to do so

I have replied that it is option to abandon, put option, but I am not sure that I have calculated accurately value of option. Paper is so long, I have already read all questions and remember the content of questions until now but I don't have enough time to finish all well :( I don't understand means of swap 1x4...

My God You are so rightt. Messed up so bad. Heart is sinking. Did you do it the correct way? How many marks will that cost?

9 marks for advantage and problem with buying Polymnia 12 marks for calculating value of Poly in case of growth rate of 5% and 0%, discussion about result 4 marks for discussion about calculating value of Poly with use of P/E and asset valuation method I remember so....

@ashleeeyc said: does anyone remember the marks allocation for Q2? I messed up badly, sigh

I have replied that it is option to abandon, put option, but I am not sure that I have calculated accurately value of option. Paper is so long, I have already read all questions and remember the content of questions until now but I don’t have enough time to finish all well ? I don’t understand means of swap 1×4…

@syncora said: Anyone thought q1 was a put option instead of call option? :/ thought I read somewhere in the paragraph that they can decide to stop further investment after phase 1 if they wishes to do so

Bad

@ivonne said: @gt0707 just a guess based on the marks allocation of similar question in the past, may lose 6~8 marks at maximum if not adding 40 basis points, as such may lead to incorrect calculation of "impact of interest rate increase and decrease with future" (about 3 marks), "impact of interest rate increase/decrease with option" (about 3 marks) and "discussion & recommendation" (about 3-4 marks in total)

Ok thank you. Damn that's a lot of marks missed due to silly mistakes. BTW 49 contracts is correct i guess coz most of us got this.