*** ACCA Paper AFM December 2018 Exam was.. Instant Poll and comments ***

@w01122 said:
Does anyone remember what they got for the APV? All i remember was that the financing impact had a big positive effect for my base case NPV calculation. I assume I went wrong somewhere, but couldn’t figure it out.

How did you treat the tax relief for the bank loan? The question said that the loan is paid back evenly over the 4 years, so did you deduct the repayment per year, and then calculate interest and tax relief of the netted amount?

I thought b) was quite weirdly worded, still not really sure what they were asking

I have got NPV about negative 5 mln,
Tax relief for bank loan I did separately for 4 years, and yes, with deducting the repayments. Actually by using the annuity factor.
Then I applied df 4% (as risk free, was given). The tax 30% on the summary of 4 discounted numbers

For subsidized loan, apart from the tax relief on 3.1%, I additionally calculated tax relief on the difference of (rfr 4% – 3.1%)

Yes, 15.98 negative APV…15.30 negative base NPV

@vatalya said:
For question 1c What did you have to do with the 400 m debt for Tai and what did you calculate as current value of a Tai share. I got a very small figure so my gains were extremely high. Couldn’t recall what I did in my past exam practice questions..

i calculated free cashflow of tai (to my mind, included interest expense accruing from 400m debt in the calculation) then used the growth model for the calculation of value.

received around 930m.

@vind1994 said:
Did anyone get a negative APV?

In Q2, I got the basis also in negative. Anybody? The spot rate was lower than futures I think.

I got the basis as positive but that’s how I do it

I took opening futures, took off the basis remaining (*1/7) and calculated my future receipt

Future opening was 1.3ish and spot was 1.2ish so I got positive basis

Btw what was your answer of Portfolio and organization restructuring??

Did you guys divide to convert or multiply for question 2

Ok . I did that too but the way those rates were written has me unsure. But I wasn’t wasting time trying to do something different to what I practised. I’m very nervous. Need to pass.

I took it as mathematically 1usd/1chf=1.034 from which 1usd=1.034chf….which means dollar is “stronger” currency as chf.

@jmmyjimmy said:
i calculated free cashflow of tai (to my mind, included interest expense accruing from 400m debt in the calculation) then used the growth model for the calculation of value.

received around 930m.

I calculated value of Tai co using free cash flow method, and deducted 400m debt (market value) to get value of equity of Tai co. And took this figure to divide by number of shares. Share price of Tai co is $3.80, if not mistaken

@niccpx said:
I calculated value of Tai co using free cash flow method, and deducted 400m debt (market value) to get value of equity of Tai co. And took this figure to divide by number of shares. Share price of Tai co is $3.80, if not mistaken

I did the same though got a different answer.

The value if equity in Chao was simple, basically given. Share price given × no. of shares.

The value of equity in Tai was a FCFF and then take away the debt figure.

The combined company was a FCFF also but cash flows over a number if years and a deferred growing perpetuity. 60% is equity so this equity value.

For the share premium question the cash offers were pretty straight forward (I think).

The shareoffers were confusing and I’m sure I got them wrong but hopefully got a few marks along the way.

The mixed offer mentioned that the shares would be 2.60 after, so is this the value of Chao shareholder after? Seems to straight forward but it basically says this is the value. Tai value would be the 2.60 plus the cash offer per share, is this right?

It’s a pity we don’t get to keep the question sheets, I wouldn’t mind having a look.

I got 2.72

I divided by 6 months future (buy dollar rate)