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@kilmovee said:
One last question anyone remember their NpvMine was about £7,000
Anyone else remember there’s?
did you guys receive negative NPV for both options inquestion 1? I got ~(5000) for first and ~(2000) with the option. I didnt use any info about the second project company was considering, so its like 100% i didnt calculate right. That should have been included in the Pa calculation i think. Just question wording was quite confusing, never mentioned that second project, only Uwe and Hingo or whatever, were mentioned.
It seems, that given future price had to be adjusted for unexpired basis of 1 month, e.g. 1/5…
I think, Jingo was unnecessary to include in NPV adjustment. More likely, it was for part ii explanations to FD, about how we arrived at Pa in Jingo project (figure was given). But I think it costs no more 2 marks anyway…
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I’ve got the negative NPV for UWA based in 2 (i) question, however in 2(ii) after considering sale to Hingo I got the positive NPV slighlty above 0.
I want to cry, my brain went completely blank and I panicked. I didn’t even put down anything for the interest swap, my instinct was that it would be of no benefit to swap with someone who has higher rates for both fixed and variable, but I must have missed something in the question because why would they even give that scenario??
Hoping I’ve picked up enough marks elsewhere to edge me over the 50%…
@kilmovee said:
The options really cost me time as I thought my first answer was wrong using the futures price and started messing etc with contracts etc oh I’m so annoyedAnd me, then I calculated the value of a put for the wrong project in Q1. I caught my error and redid it, but no time, no time.
I attempted Q3 first. It got me panicked a lil bit because i had to plan the steps to get to the desired result. The cost of equity of new company was 10%. As there was no debt, 10% was used to discount CFs. WACC was around 9.5% something. I attempted theoretical part first which in my opinion was easy numbers.
Q2 was the easiest of all. Treasury management and hedging was a nightmare for me but to my surprise i did it with ease. The future was the cheapest though. Again, theory was not so difficult
Q1 it was partly a tough question. Investment appraisal was easy. Though i forgot to add training cost which messed up my NPV but i hope i will get marks for other line items. Real option part wasn’t too great for me as i’m not very sure about the things i have done there with options. The 10 marks theory had me scratching my head for a while but did write something in the end.
Apart from the paper, i see there are comments before the exam even started for me. This timezone thing is a big issue imo.
@taimemalick said:
i see there are comments before the exam even started for me. This timezone thing is a big issue imo.So it’s currently quarter past four in the UK, our exam started at 10 and finished at quarter past one i.e. three hours ago. The first forum comment says 1:30pm, so it can’t have been made before you started otherwise you’d still be writing.
Maybe a forum settings/timestamp issue?? I’m not on best of terms with ACCA at the minute (long story) but I don’t think they’d’ve got that wrong because it would be such an easy way for people to cheat…
@aadil1234 said:
Yuwa Co earns considerable profit from other activities to take advantage of tax relief? What does this statement means? Can anyone tell me? Should we carry forward the loss or not?This is what I have done. Not sure if its correct.
i got the same i guess, but dint get to discount the cashflow due to lack of time.
I got negative NPV but then the real option made it positive so I concluded to go with the project
am i correct saying, to calculate the value of the real option that could be sold, it was a put option? that’s the way I did it but thinking now that it should have been a call..
Point of interest re Q3:
Newimber and Poynins must be based on Newtimber and Poynings in East Sussex, UK.
See https://goo.gl/maps/pxgc78yryZV1f1aA6
I live nearby, and go walking around there, so it was nice to see them on the question paper.
The downside was that I kept referring to the companies by the village names, and kept having to go back to the question text to check which letter I was supposed to miss out. I would lose my flow, find it again and then realise that it didn’t matter, all in the space of a couple of seconds. This happened like 8 times.
I thought the paper was OK, but required some non existent thinking time.
I did Q3, Q2, Q1 and spent about an hour on each.
So obviously I didn’t finish it. Missed out points ii and iii of the report.
I reckon I got between 45 and 50, and would be pleasantly surprised to pass.
@joewallace85 said:
am i correct saying, to calculate the value of the real option that could be sold, it was a put option? that’s the way I did it but thinking now that it should have been a call..No, you were right with put. Option to abandon.
Who remember inflation rate was applicable after 1st year, I remember so, but not sure now
@lucygoose said:
No, you were right with put. Option to abandon.good 🙂 might have got 1 mark there 🙂
I don’t understand what should we do in Q1 with calculated in the scenario call option and Pa 46 mln for second project. I think than examiner prepared some tricks, but I can’t guess it.
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