*** ACCA Paper FM December 2019 Exam was.. Instant Poll and comments ***

Positive nine hundred and something ha

A & B had quite a few questions testing theory rather than calculations so i’m not sure how that went. C I got the NPV nominal and real then the WACC question. I calculated the NPV over 4 years based on the directors policy with no tax allowable depreciation balancing figure. WACC I got 12.5%.

@db91 said:
Yes. But I don’t think i laid it out correctly unfortunately. Anyone remember roughly what their closing balance was?

The cash budget was a give away marks question. Was straight forward, but just got a bit tedious and time consuming just for 10 marks. I adopted a three column approach for jan, feb and March, with income and expenses for the rows. The opening cash balance was £1m, first two months was cash flow positive, but in March it was negative by approx £137k due to the dividends and the £400k quarterly interests payment on the loan notes. For the comments part, I suggested either to borrow a loan in March to cover for the cash deficit or delay or reduce the payment of dividends, baring in mind that there will be a signalling effect to the shareholders.

For me, I think this will be a hit or miss, can’t really tell how well I scored overall due to how they give the marks for the theory questions.

@goodvibes said:
I got very confused with Paris Co question. The details were something like, project Z will cause a 27% reduction in energy consumption. And then the annual cost of electricity was given which was 30m and 2% increase in it each year. Tax rate was given and it was mentioned that TAD wasn’t allowed. Also the cost of project was given which was 20m or 25m maybe.
We had to calculate NPV and at first I thought 27% should be taken out of 30m as cash inflow but then I realised I was doing something wrong and then after that I couldn’t figure out what to do and I messed it up badly.
Does anyone know how this question was to be tackled ?

Yeah i got the same question for 10 marks.

Question was like… there were 6 projects, U, V, W, X, Y, Z. Capital fund available was 70m with hard rationing (due to government imposed regulation – Project Z). Project Z had NPV ZERO and investment requirement 25m.

now Project has to be undertaken irrespective of positive/negative NPV and Profitability index. so you to take decision on remaining projects with leftover capital fund (70m-25m=45m)

(75m was a mistake mentioned in requirement….where as in question data, only 70m was mentioned)

For 27% reduction on electricity, this means that the net profit will increase by 27% reduction amount with tax increase by 25% on that increase as well and DONE….

I did the above way. Hope get pass

@tyjac said:
The cash budget was a give away marks question. Was straight forward, but just got a bit tedious and time consuming just for 10 marks. I adopted a three column approach for jan, feb and March, with income and expenses for the rows. The opening cash balance was £1m, first two months was cash flow positive, but in March it was negative by approx £137k due to the dividends and the £400k quarterly interests payment on the loan notes. For the comments part, I suggested either to borrow a loan in March to cover for the cash deficit or delay or reduce the payment of dividends, baring in mind that there will be a signalling effect to the shareholders.

For me, I think this will be a hit or miss, can’t really tell how well I scored overall due to how they give the marks for the theory questions.

I thought so too, and i had the same comments. Hope i’ll pass

Agreed,
But it also said in last part that directors are not considering after 4 years sales
As they are uncertain about the income.

There was this NPV question in section C where we had to inflate the flows: revenue(6%) ,variable costs(6%)and fixed costs(10%). The revenue and other costs were given in year 1 price terms, so we had to inflate from year (t)2 onwards ??

@kb15520 said:
There was this NPV question in section C where we had to inflate the flows: revenue(6%) ,variable costs(6%)and fixed costs(10%). The revenue and other costs were given in year 1 price terms, so we had to inflate from year (t)2 onwards ??

Correct, I believe they will give you full marks if you inflated the ‘per item’ cost/price rather than the total for each year but it sounds like you did the right thing.

Guys, if you feel that something has gone wrong – do the complaint to acca.

Yes, you are correct either we can inflate from 2nd year if 1st year’s amount is given (included inflation rate) or we can convert 1st year amount into 0 period.

as 1st year amount is 3.12 $ ( inflated @ 4%)
2nd year amount would be 3.12*1.04 = 3.24 $. OR

we can convert 1st year amount in zero period as well. like
3.12/1.04 = 3 $
1st year amount will be = 3 *1.04= 3.12 $
2nd year = (3*1.04)*1.04= 3.24 $