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balanced, I always find section A easier next Section C and lastly Section B is the most difficult. seeded questions were from Section B with OT from currency exchange. I can say exam was easy for the first time. however there were alot of catches specially with easy exams.
Section C 12 mark was NPV calculation profit figures with 5 % inflation
TAD reducing balance and tax 20 %.. Got NPV negative8 mark discursive Q was regarding the benefits of using probability analysis in investment appraisal.
Section Q in section C preparing cashflow forecast with closing balance also negative.
Discursive advice how to improve cash collection 6 mark
and 6 mark also for reasons why businesses keep cash.@huzaifa11 said:
EACCost of the Asset $860 000
scrap $60 000Life of Asset 5 Years
Bank Loan with 8%
Buy
Wasn’t the Depreciation element to do with the taxation, as in its usually on a 25% reducing balance method, it was for the useful life of the asset the 5 years in order to calculate the tax benefits per year….That’s how I looked at it I could be wrong though…
Lease £160’000 per year for 5 years
Tax 25% in arrears
depreciation was on a straight line
can any one help with the depreciation calculation????????????????
and the second question was based on cashflow statement
i got a positive balance of $344’000 end of sep???
The multiple choice questions were so tricky. Thankful for the theory questions. Cash budget and lease versus buy decision question would really help lots of us earn marks that would enable us pass.
I did not add back depreciation but yes negative NPV. Did you get negative cash flows for some years?
Unfortunately, i could not attent the exam. I am in QE and Friday is one of the crucial day for the closing. I believe that having the exam in the first week of the month is a ridiculous and irrespectful choice for ACCA. Most of the students works also in finance department and, the last and first week of the month are the most busy ones for the closure activities. If only ACCA moves the exams in the middle of the month, it would be easier for working students to sit the exams.
I wrote them several times on this, but the are stone deaf.I had the NPV Question but I think I’m the only person with positive NPV so prob got it wrong. I added back dep’n and also the $50m scrap value. I also inflated selling prices.
There was a Q about probability analysis and risk etc too@sawan2095 said:
I had a ques on NPV with operating profit given..I think we had to add back depreciation..
Investment was 100M and scrap value 50M
Working capital based on 15% of operating profit
Tax was paid in arrears Tax rate was 20%
TAD based on 25% reducing balance
I got -ve NPVYess I got this question! I got a negative answer as well! So relieved
@ash0304 said:
I had the NPV Question but I think I’m the only person with positive NPV so prob got it wrong. I added back dep’n and also the $50m scrap value. I also inflated selling prices.
There was a Q about probability analysis and risk etc tooDid you adjust the working capital?
I got the 8.6L machine with a residual value of 1.6L as well as the July, Aug, Sept cash flow forecast. My 31st and 32nd sum is right. The section A and B had a lot of sums about forex so maybe people found it a little tricky. Overall, it was a balanced paper. Section A- One could solve approx 9-10 questions properly if one studied well. Section B part “a” was quite manageable. Section B part “b” out of 5, approximately 3 questions were manageable. Rest you had to guess it if you didn’t know the correct answer. Section “c” one could solve atleast 2-3 questions.
Overall it was a balanced paper.
I hope to pass. Fingers crossed.@ash0304 said:
I had the NPV Question but I think I’m the only person with positive NPV so prob got it wrong. I added back dep’n and also the $50m scrap value. I also inflated selling prices.
There was a Q about probability analysis and risk etc tooI got positive answer as well but I didnt added bak the depn. What was mentioned about the depreciation the P. profit was including tht figure already ?
I know where I made a mistake and why I got pos NPV but I don’t think it makes much diff on marks…as I followed everything through.
DIPATIL – you are supposed to use cash flows not profit (profit fig exc dep’n) so you have to add back to get to cash flow
Section C was OK I think, but section B was hard. Discursives in sec A and B was very tricky, they can lower my scores. Especially 30-35 questions, hope they will be not marked questions. I got NPV negative but probably didnt add back scrap, time pressure was big. I wrote almost nothing about probability analysis. Fingers crossed..
I loved the CAPM questions in the P&R kit so when I was faced with the above mentioned question I was stumped, left it for last and after some workings I got to 6.6.
Beta 1.4
RF was derived from the net of 3% after tax and 4% before tax
Then I multiplied 4% with the beta and added the 1% as the RFMost likely wrong 🙁
No other way was possible, i did get to 6.2 which was another option but the working did not make sense and as such I went with 6.6.
For section C I had the lease & buy and debt/equity question.
Lease & Buy was quite straightforward in my opinion. I expected both to be negative as it was lease & but scenario and since buy had higher loan amount as well as interest the buy option was always going to be more even with tax allowance. A lease worked out cheaper.
I think my answers for but we’re 930k (rough number) and 1m (something)
Debt/Equity was funny because it asked for operational gearing for 3 years while also giving you the formula, we had to discuss the view external finance provider may have on the company as part of the question and I stated that revenue has increased and so have costs but overall profitability has increased as costs have been maintained well.
I hope I’ve done enough for 50%, I failed F5 twice now so that’s still on my horizon and for some reason this paper felt easier and a lot more structured.
Hi, i got the debt/equity ratio, n the lease question. But, i had much difficulty to calculate the quick ratio in sec B. Couldn’t grt an answer as well. Anyone got the operational gearing , interest cover ratios calculation, i forgot which section it was?
@saraadams said:
I thought it was a tough paper, I had debt/equity and lease/buy in section C. Debt/equity was ok – a little too simple? Not sure I captured all points in the narrative though.Buy/lease was ok and I think I calculated the buy option correctly but was really confused by lease as it was significantly negative? It just seemed a little too simple to be comparing a positive NPV with a large negative so I probably messed up the lease side, hopefully I will score some marks for calculating some elements correctly i.e. tax? Section B I thought was super tricky, what did people get for the quick ratio? I just couldn’t get to an answer listed! Section A I thought was OK, I skipped 3-4 questions first time around so went back as I had 10 mins to spare thankfully! The CAPM question in A was confusing though, wasn’t sure whether the risk free rate included tax or not. Was a bit disappointed leaving the exam especially compared to audit and financial reporting, I hope I’ve done enough.@saraadams said:
It’s what I went for also, good luck!Awesome, my mind is at ease now 🙂
NPV question 31 section C, was maybe easy.
Result of NPV was positive.Because in operation profit add back depreciation but corporate tax applied in inflate profit non in inflate cash flow! I think this was tricky when some of you have result of negative NPV.
Maybe my method is wrong but i think corporate tax applied in operate profit non in CF.
In general exam was difficult, because not cover important areas but have an high portion from risk management with interest foreword contract and this is very difficult when you wait business valuation or exchange rate risk!
Thank you very much OpenTuition your tuition was very valuable for me in PM and FM!
@kuku1567 said:
Unfortunately, i could not attent the exam. I am in QE and Friday is one of the crucial day for the closing. I believe that having the exam in the first week of the month is a ridiculous and irrespectful choice for ACCA. Most of the students works also in finance department and, the last and first week of the month are the most busy ones for the closure activities. If only ACCA moves the exams in the middle of the month, it would be easier for working students to sit the exams.
I wrote them several times on this, but the are stone deaf.I fully agree wth you I have always problems with my supervisors to get permission
@pete11 said:
I sat this exam and have the following feedback
Section A – Tricky questions but bearable
Section B – Tricky questions and very ambiguous
Section C – Fair questions (I got a positive NPV also after adding back the depreciation, inflating the profits and added back the scrap value in year 4)Overall I was pretty disappointed with the exam style as I think it is unnecessary to ask such tricky questions in section A and B as they should focus on the students knowledge of the syllabus not try to constantly trick the student with question types that we are not able to prepare for as there isn’t any questions like this in any exam kit I’ve seen!
Managed to finish the exam. Hoping for a pass after not preparing correctly for the September sitting and was short of a pass by 5 marks. We will see. Good luck to everyone who sat this exam!
Really agree with the second part of this.
Havingsat F5 twice and still failed I feel like most of the mcq’s in the exam are red herrings as oppose to actuall knowledge based. I remember sitting paper based exams and one would maybe get 3-4 red herring questions as oppose to each one now.
I got negative cashflow in August but closed on a positive. From three ways to manage cash better I said timing of cash flows as should of borrowed loan in August or moved purchase to September and then wouldn’t of incurred overdraft interest?
The same as most, I got negative NPV but now wondering if I inflated the cash flows before adding back depreciation first!! I hope I didn’t do that as it’s obvious now I’m not under exam pressured conditions.
Reasons for holding cash I used transaction, precautionary and speculative but don’t think I write anywhere near enough to get six marks if this was even the correct answer that is?
Agreed part A was the trickiest I have completed, and think I flagged around 8/9 questions.
Not sure if I passed but feel the same as I did with F5 and hope I’ve done enough to marginally pass as that would be good enough for me!
Good luck to all!
@dleka said:
NPV question 31 section C, was maybe easy.
Result of NPV was positive.Because in operation profit add back depreciation but corporate tax applied in inflate profit non in inflate cash flow! I think this was tricky when some of you have result of negative NPV.
Maybe my method is wrong but i think corporate tax applied in operate profit non in CF.
In general exam was difficult, because not cover important areas but have an high portion from risk management with interest foreword contract and this is very difficult when you wait business valuation or exchange rate risk!
Thank you very much OpenTuition your tuition was very valuable for me in PM
I also had a positive NPV, and added back the depreciation! So glad someone has done it the same way I did 🙂
Are you saying you added back depreciation for cashflow purposes but deducted tax from the operating profits given in the exam?
I thought corporation tax was deducted from taxable profits, which is after adding back depreciation, and then capital allowances produce a tax saving.
I could see how your method would produce a positive NPV whereas the method I used produced a negative NPV.
Since the exam I have looked back at loads of past papers and can’t find a similar question which could give us all some clarity. Would be great to get some feedback from John Moffat on this question wouldn’t it?
The FM paper was hard.Time not enough.Question paper should have been stardard for all students around the world and the 5 additional MCQ brings more stress.Moreover MCQ means MCQ, there should not have objective questions. The CBE is a flop.
Hi All,
I had that question on NPV, the company wants to introduce a new product and will invest 100mln. The WACC was 12% and inflation 5%, how did you handle that? Did you incorporate both? I calculated it seperately as I was unsure. Also, forgot to add back depreciation. I think there were also yearly injections of working capital.
Any other questions you remember? The ones I remember: critically evaluate probability analysis in capital appriasal and a question on family business trying to lend money from the bank (operational gearing ratio, interest cover ratio + plus two essay questions). I think that the business was not highly indebted and could expect to get money from the bank.
Any thoughts?
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