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

Yes they’re the capital allowances I got too...

Yes I got 5% and 3.4% too. I think he was trying to trick people.

Got the same basis , oh jeepers, hope we’re right!

What did people recommend to The Board of Directors about Project A, B, C & D? My recollection was A b and c has returns above the Cost of Capital , so I said if you can borrow / fund through equity do , and D was a very low return so don’t invest.

@unnysnowflakes said: What did people recommend to The Board of Directors about Project A, B, C & D? My recollection was A b and c has returns above the Cost of Capital , so I said if you can borrow / fund through equity do , and D was a very low return so don’t invest.

Probably using probabilities index . But i also did not

@elaine thought the question mentioned the decision criteria of the company: reject project with negative NPV, select project that optimize the soft capital rationing if project with positive NPV......Here the NPV need be considered is NPV before and after considering the value of options...By referring to related TA, I don't think the examiner may try to test us anything beyond regarding the recommendation...

@unnysnowflakes said: What did people recommend to The Board of Directors about Project A, B, C & D? My recollection was A b and c has returns above the Cost of Capital , so I said if you can borrow / fund through equity do , and D was a very low return so don’t invest.

I'm very nervous about question q1. To be honest, I read that TA in early stages and didn't look back and there were no past papers with it. I didn't calculate the NPV of phase 2 so my Pa and Pe for the BSOP isn't discounted. I wonder how many marks that will cost me. I'm hoping I answered the others well enough to get 50 and finish ACCA.

@finansist You are right that CF of y1 and growth rate of y2-4 was given, and different growth rate for y5 and onwards in the opinion of Polymnia and Clio. However, I thought the question said that the synergy saving was for y1-4 and stopped since y5, so synergy saving times 1-tax rate should be added to y1-4, but not y5 and beyond (@adolf121 ) Certainly I may be wrong as I rushed so much that I didn't have enough time to read/digest critical info carefully. I got about $19.xx m and $39.xx m for 0% and 5% growth rate respectively. Purely a guess based on marks allocation of similar question in past exam papers: - OP CF 1' - discount rate 1' - synergy saving and tax adjustment 1' - additional capital investment 1' - value with 0% growth rate for y5 and onwards 2' - value with 5% grwoth rate for y5 and onwards 2' - comment on bid price 2' - comment on counter 2'

@finansist said: @ivonne year 1 was given as an absolute figure and years 2,3,4 were given as a percentage increase werent they? I maybe wrong i cant exactly remember. I now remember that from year 5 synergy savings of 400000 shouldnt be added but i think i added them ((((((. Thats why i got abnormally high figures for Polymnia value. With 5% growth above 50mln and with 0 growth 30mln However i commented on those figures that 20mln purchase is bargain for Clio but P's shareholders unlikely agree to this price and so on...... I hope i will get marks for the comments Hope we'll pass!!

Hi, I stupidly started with Q4 as it was 'fresh' from doing it the night before. I ended up with losses on both occasions of int rate rising or dropping. My effective rates were 6.2% and 7.1%. I kept thinking that you are supposed to come back to the spot rate at the start + the additional rate applicable to the company with a small difference for basis risk. I kept going over it to see where I went wrong and ran out of time to finish everything else (1hr and 15mins wasted on Q4!) This was my 5th attempt at this exam! Q1 and Q2 were very easy but as I ran out of time I skipped things and shoved in pretend assumptions to explain why I missed parts. Lucy if I get 40% :(

I used PI and explained that since they used soft capital rationing then they should take the projects with the highest PI but if money invested was not an issue to them then they should look to do E as it earned the highest value for sh/holders. I also mentioned pecking order theory as a way to evaluate how to fund the 3 projects with positive NPV.

@dtngocanh89 said: 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....

it was 9, 10 and 6.

Q2 was 9 marks, then 10 followed by 6. I thought it was a good Q but ran out of time as did it last :( Got half way through b and missed c completely so 11marks missed out completely!!!

Disaster :-(

Hi All! What was question 3 all about? Please I need the details of the sub questions. Thank You.

Hey, Yes the hedging was very odd to me aswell . Both futures and options were a loss, thought I mocked up the basis along the way but I didn't and just continued. Went with options as well, as ftures are still marked to market daily and further loss could arise . Hoping for the best ??

Hi, everybody! I am about to attend P4 in September'18 and just read in the survey that from Sept 18 on there will be also a change in the exam structure- 3 instead of 2 compulsory questions? did I get it correctly or I misread something ? wish good luck and positive mark to all who made in June

@bilyana extracted from the AFM syllabus Sep 2018-Jun 2019 "The other Strategic Professional exams are all of three hours and 15 minutes duration. All contain two Sections and all questions are compulsory. " It seems that Sep 2018 paper would include 3 questions in total (1 in section A and 2 in section B) and all the 3 are compulsory.

@bilyana said: Hi, everybody! I am about to attend P4 in September'18 and just read in the survey that from Sept 18 on there will be also a change in the exam structure- 3 instead of 2 compulsory questions? did I get it correctly or I misread something ? wish good luck and positive mark to all who made in June

Thanks!

My recollection is a 3.something % for the base rate and Growth of 4.something ? %

Yeah , was dissapointed not to see a FRA for a few easy marks at the beginning.

Was there any 40 basis points ?? I don't think so as I remember ...they gave us limits that it won't go above 5% and below 3.4% And then in requirement it said if the interest rate increase by 0.6 % and decrease by this %? Because I didn't do 40 basis as I think it was not there

I am too nervous now as I have missed lot of information to be included ..and also I left some 20 marks straight due to time was up as I couldn't finish my paper .. I really don't know what is going to b the mark allocation

FYI - June 18 exam paper on ACCA website https://www.accaglobal.com/uk/en/student/exam-support-resources/professional-exams-study-resources/p4/past-exam-papers.html

yup i also got 8.8 and so rounded to 9 %

first time i checked it was the June exam, now it has changed it is a mix tb March/June...mostly March

@cgreg said: a) Was dividend capacity calculation and how much they would need from subsidiary b) Financial benefit to company of taking dividend from sub and potential problems c) What agency problems would be caused and how could they be avoided. I know b) and c) were five and six marks as I was running out of time.

Many thanks cgreg

Was the Q1 (b)(i) asking for normal NPV calculations ? "Estimates the value of Project E, assuming that Ruva Co does not delay the decision of whether to undertake phase two, but makes the decision at the commencement of phase one of the project"

@adurich said: I am too nervous now as I have missed lot of information to be included ..and also I left some 20 marks straight due to time was up as I couldn't finish my paper .. I really don't know what is going to b the mark allocation

Same here, left around 20 marks, especially the Q4 swaptions never attempted it at all, hope the mark allocation techniques they use gets me a pass

Did you noticed that on ACCA was not published the exam paper from June? How can we find out the answers? Thank you.

@purpletulip said: Did you noticed that on ACCA was not published the exam paper from June? How can we find out the answers? Thank you.

Hi Roxana, The answers are normally released around the same time as the results so around mid July normally.