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

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!!

Guys!!

In the hedging question the BASE rate currently was 4.4% right?

ahhh. Im going mad thinking about this. 😀

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.

Can remember other breakdowns (below)

Banking on a strong Q4 , a medium Q2 and weak Q1 pick up any theory where ever I could

Q4
A) future & option hedges 17 marks
B) Greeks Vega explanation 3 marks
C) swaption 5 marks

Q2
A) fcf with growth 10 marks
B) adv & dis of acquisition 9 marks
C) problems with PE ratio

Anybody know what was meant by the Chief Finance Officer’s comments. I know what opportunity cost is – wasn’t sure what it was in this context, nothing in the text book. Also a comment about using cost of debt as discount rate?

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 ??

@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

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

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

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