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If you receive CHF and contract size is also in CHF , then you don’t need to divide. My contact size was 98.
However Company was USA based and they needed to convert into dollar so you needed to divide in order to received in US$.
Not sure if I did rightI think issue cost was not tax allowable for tax. It was stated in the question.
Did you calculate PV of Tax lost on govt debt interest?
Also did you find the bank loan repayments by taking AF for 4 yrs risk free rate (I think can’t remember )AF 3.363, then calculated the 4 yrs bank interest
And then discounted bank plus govt interests in order to get pv of interest ??I don’t exactly remember but I think APV was 157m
Did you calculate PV of Tax lost on govt debt interest?
Also did you find the bank loan repayments by taking AF for 4 yrs risk free rate (I think can’t remember )AF 3.363, then calculated the 4 yrs bank interest,
And then discounted bank plus govt interests in order to get pv of interest ??
Thats how i calculatedI don’t know if i did right but, For part b I think half of the answer were given in the question itself ? Just needed to explain it with concept.
@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 mistakenI did the same and got $3.8
FOR Pao I think the total equity value was 5000For everyone on the futures rate, we have a receipt of 12.3m CHF and the rate is 1.03 $ for 1 CHF
Therefore regardless, you’ll want to eventually multiply by the 1.03’since dollars get you more than CHF
I did it differently. The cost of capital was 11% or whatever the figure they gave for Tai. they didn’t give an interest rate, so i did the FCF and used the 11% so did not deduct interest because that is in the cost of capital (not Ke) and then deducted the 400m debt and came to 717.25 as my value of Tai
@nathan488 said:
For everyone on the futures rate, we have a receipt of 12.3m CHF and the rate is 1.03 $ for 1 CHFTherefore regardless, you’ll want to eventually multiply by the 1.03’since dollars get you more than CHF
If I remember correctly in the exam the exchage rate1.034 was stated to be quoted USD/CHF. I was now googling how to read quotas. The currency to the left of the slash (USD) is referred to as the base currency, and the currency on the right (CH) is called the quote or counter currency. The base currency (in this case, the U.S. dollar) is always equal to one unit (in this case, US$1) It can be thought of as the amount of CHF (1.034) that you would need to sell if you wanted to buy US$1. So you need to divide the amount in CHF with the rate given to get amount in USD and it will be less than 12.3M.
@bejkaad said:
If I remember correctly in the exam the exchage rate1.034 was stated to be quoted USD/CHF. I was now googling how to read quotas. The currency to the left of the slash (USD) is referred to as the base currency, and the currency on the right (CH) is called the quote or counter currency. The base currency (in this case, the U.S. dollar) is always equal to one unit (in this case, US$1) It can be thought of as the amount of CHF (1.034) that you would need to sell if you wanted to buy US$1. So you need to divide the amount in CHF with the rate given to get amount in USD and it will be less than 12.3M.I would have to disagree with you on that. I think regardless we’ll lose 1-2 marks top
But I looked up the CHF/USD rate and it says currently that 1 CHF gets you $1.01 therefore in the case of the question the 12.3m CHF will get you more USD and so you multiply
And from past questions; the exam rates given are always presented on the stronger/weaker currency. Ie: if they gave you a GBP/USD rate it would always be 1.+ /1$ as opposed to 0.7 for example to 1 dollar since the pound is always stronger than the USD
How did you guys get 157m for apv I had single digits sigh… I thought I did well in this paper but now I don’t think so.. I know where I fell down was calculating the growth on the fcf for Tai as a perpetuity. I didn’t remember that foreseeable future was perpetuity.. I was thinking one year growth… I wonder how many marks were at risk for that growth calculation. What did you guys say Tai would prefer as an acquisition offer?
I made a stupid mistake by adding the PV of the unsubsidised loan to the costs and therefore got an answer of (15.8) when it was positive 5. i hope i get marks
For the share offer it said Tai got 55.5% of synergy benefit and Chao 44.5%. Was that overall equity benefit or a per share benefit? I read it as overall equity. If that was Correct it was a lot better for Tai shareholders as they got more than half the benefit and a lot less shares to share it out between.
No brother, you are wrong here.
1.034 USD = 1 CHF then,
X = 12.3m CHFJust do a simple cross multiplication. You will get a higher dollar amount. The google will also tell you that CHF is stronger to USD and for every 1 CHF you will get a bit more higher US dollar.
@vatalya said:
How did you guys get 157m for apv I had single digits sigh… I thought I did well in this paper but now I don’t think so.. I know where I fell down was calculating the growth on the fcf for Tai as a perpetuity. I didn’t remember that foreseeable future was perpetuity.. I was thinking one year growth… I wonder how many marks were at risk for that growth calculation. What did you guys say Tai would prefer as an acquisition offer?Chill bro, as long as you carried out the basic calculations alright and took your own figures to conclude at the end you will pass the question.
@adarshjanan said:
No brother, you are wrong here.1.034 USD = 1 CHF then,
X = 12.3m CHFJust do a simple cross multiplication. You will get a higher dollar amount. The google will also tell you that CHF is stronger to USD and for every 1 CHF you will get a bit more higher US dollar.
Agreed.
@vatalya said:
How did you guys get 157m for apv I had single digits sigh… I thought I did well in this paper but now I don’t think so.. I know where I fell down was calculating the growth on the fcf for Tai as a perpetuity. I didn’t remember that foreseeable future was perpetuity.. I was thinking one year growth… I wonder how many marks were at risk for that growth
calculation. What did you guys say Tai would prefer as an acquisition offer?My APV was also 157m
Regarding first question, Tai was perpetuity but I think the combined was not as combined was growing at 4.2% after the 4th yearSomeone post earlier that SBR Dec18 has been uploaded by ACCA..I tried to find it but cannot locate ….however, have seen the question today in some other platform…surprisingly it is quite fast it is out!!…
@stonecold said:
My APV was also 157m
Regarding first question, Tai was perpetuity but I think the combined was not as combined was growing at 4.2% after the 4th yearCombined value you needed to get the free cash flow for each of first 4 years. yeah 5+ was a growing perpetuity so needed to get this and discount at previous years discount rate and add the 5 amounts together for combined value. Multiply this by 60% for the equity value.
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