*** ACCA Paper FM September 2018 Exam was.. Instant Poll and comments ***

I did the same….. answer came correct only by using these values…. i checked it….

I found the paper OK. Section A multiple choice was so-so. Section B had one scenario in relation to exchange rates (money market hedging, future forward rate and etc.), one in relation to the EOQ model, and one for a business valuation. The first section C question was to calculate the cost of equity using the CAPM method and a proxy company. It then asked us to explain three problems with a high gearing level and lastly, we had to discuss the risk-return relationship of debt and finance and comment on the financial aspect of the scenario. The second question was to compare lease and buy options, EAC or replacement period and to discuss four reasons as to why NPV is superior to IRR.

For sections A and B I felt OK, I obviously guessed some but they were a lot like past exams and BPP revision kit. For the first section C question I was ok with the method of ungearing and gearing, however, I had trouble calculating the market value of irredeemable shares. I had some OK points for the other parts of the question. For the second question I got borrowing of the asset to be less costly… I was wondering whether I shall include the interest foregone by the lease but I only included the lease payments. For the replacement period, I calculated the NPV but I calculated by the number of years and not the annuity factor. My conclusion was that it should be replaced every four years… I still hope to get some marks on it…

And that’s it from me…

same paper…but its not difficult

@monicastoimenova said:
I found the paper OK. Section A multiple choice was so-so. Section B had one scenario in relation to exchange rates (money market hedging, future forward rate and etc.), one in relation to the EOQ model, and one for a business valuation. The first section C question was to calculate the cost of equity using the CAPM method and a proxy company. It then asked us to explain three problems with a high gearing level and lastly, we had to discuss the risk-return relationship of debt and finance and comment on the financial aspect of the scenario. The second question was to compare lease and buy options, EAC or replacement period and to discuss four reasons as to why NPV is superior to IRR.

And that’s it from me…

We had almost the exact paper it seems.

There are a few questions which have been bothering me in terms of the answers I put.

There was a question about EOQ, in which a discount of 0.05% was offered if the company ordered 60,000 units minimum. They currently were ordering 20,000 each time.
I did the normal comparison of without discount (20,000 units) or with discount (60,000) and worked out the difference in cost, but could not get any of the answers provided, mine was different even though I did all the steps.

Did you manage to get an answer for this out of the options (did anyone else get this question either)? I was thinking of trying the EOQ formula and comparing that to the 60,000 option, but I thought it was to compare against their current order level of 20,000.

Also there was a money market hedging question about using the forward rate to hedge against the remaining risk. There were $ receipts and payments, also a pesos amount. I was hesitant about the figure I used – to either multiply the $ amount of the receipts (800,000 I think) with the forward rate, or to match it first with the payment of 50,000, therefore only leaving 30,000 to hedge. This was what I did (assume they matched the recieipts/payments first then forward rate the remainder). I only did this because the question said “remaining” risk. It made me hesitant seeing that but I’m concerned that it’s maybe not right.

In section b i had question number 21 from forex forward hedging money market hedging for making payments there is no receipt given in question question no 22 from woking capital payable discount does any one remember the mcq and answer and question no 23 from business valuation in question no 32 lease and buy choose buying option cost saving and in eac 4th year should be choose 160000 initial cost maintenance cost increasing to 12000. 3rd year scrap valu 40000 and in 4th year scrap valu goes down to 11000 in year 4th should be choosed lowest eac in question 31 i did the blander forget to regare the beta my beta was 17.8% in section a what was npv value under perpatuity eps answer does any one remember mcq answer please let me know

@yusufbg said:
5 was right isuse price and 6.6 was ter price

7 is market price

Directly reduce .4 from it to arrive at TER
Ie. 6.6

then use two three combinations to check which answer gives correct right issue price
Which worked out to be 5

Hope it is clear

I got 6.6 but still don’t understand how you got to 5.

What do you mean by 2 3 combinations????

The EOQ questions none of my answers matched the ones but the closest I got was saving of 7,500 so I choose benefit $8000
I am terrified now to be honest 🙁

The paper was a disgrace!! I had no WACC, investment appraisal, over trading Q, No big NPV question!! How can none of those come up as a big Q! The people who got investment appraisal got an advantage!

I got that too…I was so happy to see the answer when I finish calculated it Lol
I hope that’s the 2 marks I need to pass yes sighsssssss

@sulli said:
Money market hedging options were

169180 my answer hope its right
173k
175K
163K

peso 1,200,000/1.019 deposit= 1177625

1177625 / by either 6.900- 7.100 peso i chose 7.100= 165863

$165863 * home interest 1.02% =169180

I got that too…I was so happy to see the answer when I finish calculated it Lol
I hope that’s the 2 marks I need to pass yes sighsssssss

The exam was hard nothing came as compared to what I was going through during the revisions. Section A questions where trick and section B was bad too.