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

I thought the exam was difficult, the MCQ's were horrible. My long questions were the lease vs buy and then eac of the borrowing costs. How did people attempt the eac part? Then the other long question was cost of equity with CAPM and project specific cost of equity which I thought was ok but it was only for 6 marks!!

I was so happy to see the investment appraisal question in sectionC?????! Yey!! I hope it helps me score above that 50 pass mark. The capm question I wrote only a few things, hope it goes well. SectionsA and B had a mix of difficult and okayish questions, the theory question in sections and B were tricky, some of the calculation questions were fine and others were long so I just guessed answers due to time.

I was so happy to see the investment appraisal question in sectionC?????! Yey!! I hope it helps me score above that 50 pass mark. The capm question I wrote only a few things, hope it goes well. SectionsA and B had a mix of difficult and okayish questions, the theory question in sections and B were tricky, some of the calculation questions were fine and others were long so I just guessed answers due to time.

I wish I also had lease vs buy. EAC (equivalent annual cost)= npv÷annuity factor

The exam was a challenge, the questions were like nothing in previous past papers and I did quite a few. I did something for everything and the theory answers is where I felt more confident. Multiple choice I managed a few correct answers but the others I had to reason and guess. It was a horror and I needed every brain cell on deck!

Hi, I had the exact same paper. I will wire what ever I remember. So rate of tax which NPV 0 is 27.65% or round up to 28% answer. How I got this answer, I copied all forecast figure from 1 to 4 years and I kept increasing tax to get to 0 NPV. I think it was common sense question.

It was ok, in section C - lease or buy, then evaluation of replacement period. Written question about benefits on NPV. It's funny but I was sure that such questions will appear! Second one was about capital asset pricing model, not mush about calculations, but also good and there were a lot of chances to get marks by discussing issues. Overall nice and honest september session)

About half of Section A question were new to me. None like I've done before, and I did all Revision book from BPP. This is strange, how can it be so?

Rate of tax that would bring it to zero? I think you then use the IRR(internal rate of return) method?

I'm not too happy about the exam paper. On Section B, I had guessed about 4-5 questions. Although on Section C, the first part was the lease vs buy, EAC, and why NPV is superior to IRR. That blew me off a little. Then the 2nd part I had was the Discount Factor options 1 or 2. Did anyone get the last question when it was asked to discuss 3 factors of investment's in working capital. I had just explained what Trade Receivable Days, Trade Payable Days and Inventory days is.

This exam was awful. :( It had everything in it that barely was covered in my studies. In section C I had lease vs buy (where I think I did ok with calculations), EAC (also think I did ok) and why NPV is superior to IRR (only remembered 2 out of 4). I felt like there were some questions that were repeated in all sections in some way. In section C I also had were the asked for cost of capital with CAPM method and to calculate cost of capital specifically for project (beta re-gearing etc) which I completely flopped with. In section B there were questions about market value of loan notes and business valuation on earning basis (completely guessed all of those questions). Can only cross my fingers and hope for the best but all in all not a good feeling about it. Will continue to study so if i don't pass i can book it for December straight away.

I only just failed last time - had a migraine and gave up after 2 hours and got 46. If I get 46 this time it will be a miracle and I worked until it ended. I had the Sensitivity Analysis and CAPM questions with the ungear /regear but than blanked totally on risk and return. Some of those MCQ - oi. I went in feeling ok and walked out feeling shattered. Oh well bring on December.

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

Did anyone have the upside/downside mcq? Any clue what that was about? I had to drag the boxes across but they would only go in one of the two columns. I wish they'd just stick to a,b,c,d radio buttons.

My CBE MCQ: issue 1:4 of share, existing share price $0.4, currently market price $7, ask: theoritical ex price? original price? Anyone know this?thanks

Hi vicki You and me had same long questions in section C Surprise was tax rate to bring NPV zero In sensitivity analysis question What i did was punched all numbers again on excel and was changing tax rate till i get NPV zero :) so I got 31.6% or 31.16% *dont remember exactly but one out of this) as tax rate and then wrote a comment that Nov will be zero at 31.6 rate tax rate. Then spent almost five min to figure out if i could create some formula to show to examiner but was not able to do so. So i kept original working of punched numbers as working It was tough paper. No doubt Hope i make it through

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 think u only worked on tax rate We also had to work on tax as well as tax benefit deductible

@sulli said: Hi, I had the exact same paper. I will wire what ever I remember. So rate of tax which NPV 0 is 27.65% or round up to 28% answer. How I got this answer, I copied all forecast figure from 1 to 4 years and I kept increasing tax to get to 0 NPV. I think it was common sense question.

U had to do recomputation on tax amt as well tax benefit on assets I think u missed on tax benefit My answer was somewhere 31.6 or 31.1

My capm was about 19.28 or 19.48%... because my asset beta came .94 and then equity beta 2.57

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

@umar7575 said: My capm was about 19.28 or 19.48%... because my asset beta came .94 and then equity beta 2.57

That is exactly what I got for the project specific cost of capital.

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...

Sections A and B were horrible. Specially Qns 21 to 25.

same paper...but its not difficult

@badare said: That is exactly what I got for the project specific cost of capital.

I got the same as well... except, I wasn’t sure if I calculated the irredemable share market value correct... I calculated it as follows -> 65/100 x 250 ... hope it’s correct.

@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.

Does any one remember the eps mcq answer where divend value dividend yield given

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

It is clear that section C was different questions for different students My Section C was Sensitvity analysis and CAPM Unexpected questions, Section A was Ok, Section B was horrible and Section C was unexpected. Section C, When NPV = ZERO AND THE TARE OF TAX was easy to test the NPV using excel to increase the tax rate until you come to NPV = Zero however I did not use this technique! in addition I did not discount the contribution to get the PV of contribution. I recalculated year 4 and recalculated npv and again Sensitivity analysis did not discount the contribution to put it in the PV. CAPM got 18.4 %. I missed everything up but there were alot of discursive question bit easy. I think it is better for me to prepare again even I have hopes to pass!