- This topic has 78 replies, 37 voices, and was last updated 4 years ago by
.
- Posts
I took a differnce of 70% of pv and 1 m i wrote that pv of 70% was more favorable as 70% applications acceptable.
Did anyone else get negative gain/ loss for shareholders in the first question?
Sale value for the Tech Part was 5,504 million and Present value of Cash flows to firm was around 18,000 million, then I used the Debt Equity proportions at market value to calculate Value of Equity post acquisition which came out to be less than the whole bid amount already so I got a negative value there and from that were supposed to deduct the pre-acquisition value of the bidding company which would only make the negative number bigger.
Am I wrong somewhere? Couldn’t frame the report based on thisWhat was answer for rational for hedging and communicating to stakeholders.
I wrote that the main objective is to maximise shareholders value whether are well diversified or notDid anyone else get completely confused in question 1? And why did it repeat nearly 3 times the debt and equity values of Matravers? It was written so many times!
I got very confused by the wording of the report questions for question 1 too, I just couldn’t grasp what they were asking numerous times??? I just really hope to get marks on the other two?I got 9.7% as the WACC for question 1, what did anyone else get??
I got WACC 8.08% which I rounded down to 8%
Did you get a positive gain for shareholders of bidding company? For me it was a high negative number I don’t know if there was something wrong in the question. The 6% profit margin on revenue seemed suspiciously low.
Sale value for the Tech Part was 5,504 million and Present value of Cash flows to firm was around 18,000 million, then I used the Debt Equity proportions at market value to calculate Value of Equity post acquisition which came out to be less than the whole bid amount already so I got a negative value there and from that were supposed to deduct the pre-acquisition value of the bidding company which would only make the negative number bigger.@leahmo said:
Did anyone else get completely confused in question 1? And why did it repeat nearly 3 times the debt and equity values of Matravers? It was written so many times!
I got very confused by the wording of the report questions for question 1 too, I just couldn’t grasp what they were asking numerous times??? I just really hope to get marks on the other two?I got 9.7% as the WACC for question 1, what did anyone else get??
I also got something like 9.7 which I rounded to 10 percent. Yeah I noticed it was repeated a lot!
@reco said:
I got WACC 8.08% which I rounded down to 8%
Did you get a positive gain for shareholders of bidding company? For me it was a high negative number I don’t know if there was something wrong in the question. The 6% profit margin on revenue seemed suspiciously low.
Sale value for the Tech Part was 5,504 million and Present value of Cash flows to firm was around 18,000 million, then I used the Debt Equity proportions at market value to calculate Value of Equity post acquisition which came out to be less than the whole bid amount already so I got a negative value there and from that were supposed to deduct the pre-acquisition value of the bidding company which would only make the negative number bigger.I found a similar issue when I got to this point, seemed like the predator company was very large pre-acquisition, bigger than the forecasts of the combined. In the end I was running out of time so had to just leave it at that and take a hit on the marks! Still blabbered about the assumptions made etc so hopefully got some marks still.
1a)behavioural factors for overvalued high-tech companies
1b. i) FCF valuation of acquisition
ii)WACC
iii)post acquisition benefit to W. Co if premium accepted. (10marks)
iv)strategic aspects, financing (12marks)1c) factors to consider for financing.
Did anyone remember specific questions that was ask in Q1 iii & iv ?
I believe I got lost and mess those part up.
Any input will be appreciated just so as to check if i can get any mark from the (22marks)I could not find the bid amount in question 1. What was it. I read over a couple of times but just couldn’t see it or what it could be derived from. Had ti move on, did the whole thing with no price paid/bid amount ????. Was very time pressured overall
Also was anyone else bothered by the noise at the Excel centre. Hall next door constant noise of construction and what sounded like poles dropping on the floor
@carlynb said:
How was the spot or futures rate determined for question 2?At the transaction date
I calculated basis using spot rate – opening future rate then adjusted with /6 months x 1 month adjusted =it was – 0.86 something
Then Lock in rate as opening future – remaining basis.@kashafhamid said:
I calculated basis using spot rate – opening future rate then adjusted with /6 months x 1 month adjusted =it was – 0.86 something
Then Lock in rate as opening future – remaining basis.Thanks
Question (1a) behavioural factors am thinking Maximisation of utility,Analsyis of information,cognitive dissonance and herding from the point of the acquierer and the aquiree.
Q1 A. In Behavioral factors part, I first mentioned what behavioral factors are and then I wrote about winners curse, over optimistic about the synergies, management bias
B. Value based on PE. I first took out martravers tech PAT and multiplied with similar sector PE ratio to get value then deducted with the cashflows provided.
C. I just checked with the past papers and I have not calculated the weighted avg asset betas right and my wacc came out to be 8%. Hoping I’d only lose 2 marks in this.
D. Additional value I got by calculating combined value using free cashflows to firm then deducting debt to get free cashflows to equity. Then I deducted market value of equity of individual companies. I forgot to take the premium. But my value also came out to be in negative as most of you all.
Was anybody’s answer different to this?What was the answer to:
– financial and strategic value?
– financing ways and gearing level?
– currency risk policy and benefit of communicating to stakeholders?
-Q3 A) npv question of one year delay, how you all calculated?
B) expected value npv?
C) alternative npv of project?Kindly all tell what they wrote to this
Doh. Thanks. I completely missed it. Will be a resit I think, I didnt have enough time to complete all parts of each question
I remember the details for calculating free cash flows were about the target company’s home sector only, after acquisition. The question said after selling city center stores of the company’s home sector the projections are… this can be the reason that you got negative value, although i am not sure that should be positive, cause i mistakenly deducted only premium from the acquisition gain, instead of deducting both premium and equity value of the target.
@reco said:
I got WACC 8.08% which I rounded down to 8%I had the same.
I used debt:equity ratio like (debt/(debt+equity)@reco said:
Did anyone else get negative gain/ loss for shareholders in the first question?
Sale value for the Tech Part was 5,504 million and Present value of Cash flows to firm was around 18,000 million, then I used the Debt Equity proportions at market value to calculate Value of Equity post acquisition which came out to be less than the whole bid amount already so I got a negative value there and from that were supposed to deduct the pre-acquisition value of the bidding company which would only make the negative number bigger.
Am I wrong somewhere? Couldn’t frame the report based on thisI had a positive amount.
5504+18 mln +synergy+MV of West = total market value was about 61 mln.And after that we minus back WesT MV – 12000m (Equity MA) – 6500m (Debt MV) – Premium 2850 = gaian as remeberaprox 4 mln
@carlynb said:
How was the spot or futures rate determined for question 2?From the direc quote, 1/0.87 (didn’t remeber exactly rate) = 1,4….
- The topic ‘*** ACCA Paper AFM March 2020 Exam was.. Instant Poll and comments ***’ is closed to new replies.