FMACCA Paper FM September 2020 Exam was.. Instant Poll and comments

How was the exam? Who got the debt or equity question? What was the method of solving that question?

How was the exam?

I feel section A and B could have been better but Revision practice kit questions didn't help in this part. Section C was overall good. Let's hope to cross 50 marks

What you get on sec c

Section c I got the lease or buy through a loan option. How did you answer that

The paper was ok! Some MCQ were ok some were hard! Part C I got the NPV question which was fairly straightforward however the equity debt question was confusing! I just did some workings but not sure if it’s the correct answer! Anyone who did the equity debt question! Could you please let me know how did you do it! (If you remember) Overall I hope to get 50

Holy moly I am an idiot. I didn't revise factoring or lease vs buy that much because I thought meh, they're easy, it'll be fine... I got factoring and lease vs buy in section C (Blank Co and Grout Co I believe). Oh well, I tried my best! I didn't even have one question on CAPM or WACC which was my favourite topic...!

Hi I got the NPV lease/buy question too but there was no discount rate? What did you use as the discount rate?

what was the theory question on the debt equity question?

I took out the interest coverage and financial gearing for both methods and then recommended equity. For the NPV question, did you add the Remaining working capital at the end? And was it a positive NPV of $60000 something ?

Haha same here! There was no discount rate though in the Grout Co question?? Thats the first ive seen without a discount rate?

I got that question too, i recommended the lease option because of the savings in servicing and interest costs && the freedom to leave the contract if the machine does become outdated due to technology. Section A was more difficult than i expected

Theory questions were the differences between systematic and unsystematic risk (5). The next one was assumptions in CAPM (5)

thank you

For grout you get the discount rate by this formula post cost of capital( 1-0.20) I got 5.75% for discount rate can’t remember what the interest rate was for the lease .

I ended up getting 6% for the cost of capital on Grout. I just multiplied the bank loan interest by 1-T (can't remember if tax was 30% or 20%) and I used the same for the lease. Because I didn't revise leasing enough I couldn't remember what to use as cost of capital so I just used the same one haha!

Interest for lease payments was 8.75%, tax 30% and reducing balance depreciation was 25%. They were the only rates in the whole question. I wasnt sure so I just assumed disc rate of 10% lol?!

What was the Nov for lease and buy

Npv?

I had a negative NPV

Can you remember what you got for the lease or buy option npv

Cant remember exactly but i got that leasing was cheaper

Yeah got around $1.4million

Oh gosh I really think I've messed up my answer to that leasing question. I got that buying was cheaper at 6% discount (it was mainly because of capital allowances), then in the next question I wrote about how buying was cheaper, however if they choose the lease it'll be more beneficial from because if the machine goes obsolete they can break the lease. Did anybody else get that buying was cheaper? I think I may have missed something in the calculation.

Did you anyone just get an NPV question but without the lease or buy! It was a long question with inflation for prices, VC, FC?

Did you add the Working capital at the end of yr 4?

Its alright I used the wrong discount rate but hopefully we'll get good working marks... i think (hoping the tax claim was where the main marks were)?

Yea I did but did you get the NPV question ? Without the lease or buy?

No but that was the dream question I was hoping for!!!

Yes i got it but ended up with a positive NPV. Still unsure if i should’ve addded the working capital at the end or not