AFM*** ACCA Paper AFM June 2019 Exam was.. Instant Poll and comments ***

It was ok. I lost my thought for question 2

It was ok, but I didn’t have time to complete question 3. Questions 2 and 3 seem not hard

What questions were asked?

It was easier than I expected (or so do I think)), id be confident i passed if students in my classroom didnt decide to perform calculator solos

The mental agility you need to be able to pass this exam is on another level. I can’t even explain it. Reading, recalling theory, digesting and actively working on the numbers requirements fried my brain cells. Cheers to an expected fail mark so I can try P5. I’m done with this one.

For the fcf valuation of new company in Q3 what was the discount rate? i used wacc for the company as the discount rate because i panicked with little time left. the valuation i got looked completely wrong but hopefully would not lose too many marks on that if the method used was correct? i didn't have enough time for the 10 marks at the end of Q1 either because of time constraints.

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?

I thought the exam was ok. Struggled with the valuation of Pa and Pe in the Honou offer in question 1. Question 2 I thought was ok Question 3.... not good. Just ran out of time. Went to pieces a bit. Mind went blank with the weighted cost of capital. But think I did ok on the free cash flows valuation. ( although not happy with the discount rate I used ... hoping to have gained marks around this ) Hoping I’ve done enough in questions 1 and 2 to have passed this... failed with 46 the last time!

Q1 was the hardest... The black sholes model was asked so different. The NPV was easy Q2 this was quite easy... Blanked slightly on the swaps but overall good Q3 this was easy ungearing beta, wacc of numiger and the the ungeared cost of equity poylins (can't remember the exact name of companies) Hoping I've done enough to pass..it will be a close call

Way too lengthy of a paper in my opinion.

@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?

Any losses incurred are assumed to be used up in the same period against profit in another part of the business .... so losses should not be carried forward.

I got 9.56% new rate ...

Are u sure?

as I remember I took 9%, but I don't remember whether it was Ke or WACC :)

I got 9% for the Wacc of company n and company p was just the cost of equity as it had no debt. I think it was about 13% which sounds about right as you would expect the ke to go up as they nolo ger have tax shield

Anybody remember that effective interest they got for the hedge

Can someone just reassure me with the interest rate options.... the future rate was given to us wasn’t it? We didn’t have to calculate it.... all the doubts are starting now

5.81% I think I got for options. Swap was 5.45% I believe. I think the rate that was provided from the futures was the lowest rate.

I got 5.7 and I got 5.45% for swap... Not over confident on either. Basis was 25 and only 1 of 5 months were remaining

@louiseabigail said: I got 5.7 and I got 5.45% for swap... Not over confident on either. Basis was 25 and only 1 of 5 months were remaining

Yeah... I didn’t work out he future using the basis. For some reason there was a figure there that I just used ( so I think I’ve lost a couple of marks here)

I'm not overly confident on the options or the swap so don't go by my answer ?

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 annoyed

Was that assuming a .15 gain

One last question anyone remember their Npv

@kilmovee said: One last question anyone remember their Npv

Mine 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.

I got negative NPVs for both scenarios

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...

I got positive of 8,000