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I felt the same. Nothing on working cap, cash, receivables or inventory and they were literally my stongest areas! The valuation questions were tricky the way they worded them and God i hate foreign currency esp money market hedging calcs and the bloody difference between the hedging tevhniques! Nightmare paper!
I got this too!! I couldn’t work out where the $6.60 came from and mine kept coming out at $6.68 too!! Fingers crossed ??
With the S-C NVP question about the projects there was one pet where they had said that $125m was included in the initial outlay amount shown but it related to developmental costs already spent? I literally had no idea what to do…was that already part of the overall investment?! ???????????????
There was also another question in S-B where we had to calculate the amount payable on a FRA?! Had no idea.
Yes I had this one also. I worked out all solutions. 3 out 4 times I calculated I came up with the MCQs options so I selected 18.4% in the end-it was a guess though
Guys, do you remember anything else (like details on questions)? I would like already to prepare to next session and they will publish only few questions (if any) in few months.
The amount of FRA payable was the 2nd multiple choice that completely floored me (along with the TERP question).
Literally had no idea.
This was my 3rd sitting of FM and like last times I’m still not confident I passed. ACCA seem to have a new way of asking questions unlike past papers.
Section A & B were/are always going to be the trickiest. Those select 2 out of 4 really get you thinking. You know that 1 is definitely wrong but then it’s a coin toss with other.
Section B – I had a valuation question unlike anything I’ve seen before. They asked to get value using P/E ration and I literally didn’t know. It’s like I didn’t have enough information to do it (so I guessed) and again value using DVM (again guessed).
The other ones were interest rate FRA (They borrowed so you use the higher rate of 7% but then the rate came in at 6.6 or something and as the company is locked into the higher rate they have to pay back the bank the 0.4% which I think was $100,000). There was a Money Market Hedge in there for receiving a set amount of money. I never understand the theory sections of interest rates!
Section C – I had an overcapitalisation/undercapitalisation question. Calculate and analyse using industry averages and then talk about the financing policies. I wasn’t sure what to talk for this part so I talked about Aggressive/Conservative and matching but again wasn’t sure if that was correct or not.
I then had an NPV question. They didn’t give you nominal/money factor but gave you the real rate and the general rate of inflation so I used the Fischer equation to get the nominal rate – 1+money=1+real rate * 1+inflation which gave me 9% I think!. Outside of that I didn’t think there was anything too weird about. They didn’t actually give the inflation rate for the selling price so I just used the general one of 6%.
The last part of that question was to define and discuss the causes and solutions to hard and soft capital rationing.I had the same paper as you. But for the section C question, I don’t inflate selling price. They said the $80 was for each year. They didn’t say anything about selling price changing. And my nominal after tax cost of capital was 9%.
Omg I had the same question also got 9% and use the general rate of 6% on selling price(been losing sleep over that as wasn’t sure on it)
naasiha wrote:I had the same paper as you. But for the section C question, I don’t inflate selling price. They said the $80 was for each year. They didn’t say anything about selling price changing. And my nominal after tax cost of capital was 9%.
Omg I have the same question and got 9% and also used the general inflation rate of 6% on selling price ( was losing sleep over that as wasn’t sure )
I think they gave the rate of inflation for both fixed costs and variable costs but I didn’t see any for selling price. I applied the general rate of inflation of 6% to the $80 but if it’s not correct it’ll only be a 1/1:5 less of a mark.
The theory parts for me in Section C were:
• Discuss the working capital financing policies the company could adopt
•Define hard and soft capital rationing, discuss the causes and solutions that a DIVISION (not a company) could do to overcome them.Dear Members, Where we can check FM questions and answers for December 2020 exams? we do have such kind of options?
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Nope! I saw a similar example in the revision kit I think the marketing costs weren’t included
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I think those projects in capital rationing were divisible and we had to calculate profitability Index (PI) and rank the projects according to the ones which yields the highest PI followed by the next highest and so on…!
For the questions where they ask to choose two options, do we not get a mark if we get 1 right? I am sure acca gives 1 mark instead of marking it as incorrect.
What did everyone get for the cum div redeemable share question in section B MCQ’s
Hi rinapragji,
Unfortunately you have to get both right in those two option MCQs. I wish we would get one right but you don’t.
I do remember that cum dividend irredeemable pref share question but I just treated it as if it was ex dividend. I think I remember seeing somewhere that irredeemable preference shares are never really purchased back and work into perpetuity so it was ok to use the cum dividend unlike all other times when we use the ex dividend.
I think I just did: Interest*(1-tax rate)/ market value as it was cost of the irredeemable shares and not valuation question (I think).
This could be COMPLETELY (and probably) wrong but it’s what I did!Hi Graham Megan
Both tutors of mine have confirmed you will get a mark. Fingers crossed.
The redeemable share one was tricky because it was a dividend so not sure of tax was deductible. Hate the mcqs….
Hi Graham Megan, would you by any chance be looking for a study partner going forward?
Rina
Fingers crossed is right. I’ve reached out to ACCA for confirmation. I will let you know once they respond.
Yes that irredeemable preference shares was tricky alright. ACCA are very creative in ways they ask something that you know but due to phrasing it always confuses me.
I’m not looking for a study buddy. I do have one already but thanks for asking ?
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