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

I got npv (1555121) for buy and lease (1400321)

I think that’s what I got for the lease

I did add the Working capital at the end as well but I have a feeling I made a mistake with my working capital calculation

I got the Expected NPV with the variable cost using probabilities for 1st question in section C The 2nd question was Equity and Debt. I increase the PBIT by the % in the question. If you use equity the finance cost stays the same as per extract and if you use debt the finance cost increases by the 8% loan notes and then you recalculate the profit based on those adjustments and then recommend which is better. I then just compared the interest covers rates with the current extract.

i got grout co With out NPV

Section A and B were quite tricky Sec B the business valuation question they asked what the minimum price of a share should be so that the 25 shares and the loan note value would be equal could someone tell me the answer and how they got it cause it didn't have a cost of debt value

also blank co. with receivables mgmt. with factoring. i recomended factoring theory part was good but lengthy. overshoot the timing in sec c and OTQ for FRA and asked to calculate sopt rate after two years (was in unknown territory)

Also I got a sec C question for lease and buy where 4 * 100000 payments were made but the tax saving on that should start from year 1 right. In that question the borrow to buy was cheaper than lease according to my answer hope someone could add into this as well

Yes I had the same and if I’m correct was it the preference shares are you talking about. I was expected to divide I/kd but couldn’t figure out the kd part. What is did was (which is probably wrong!) I divided the I(1-tax rate) and got 4% and then I divided the market value by the nominal value and got .68 and then divided 4/.68 and miraculously got one of the answers but again it’s probably wrong! Spent too much time trying to figure it out haha

Sec B risk management question got to select the borrow amount and deposit amount in one question and also a forward rate value for a receipt of 300000 MS

I don't think we are talking about the same question my friend, cause my question didn't have any options we had to directly put the value which made it harder to even give it a lucky shot? It was about a convertible loan and what should the share price of the shares be for the decision of conversion not to matter.

Lolz yeah even I spent too much time thinking for that 2 Mark's question which could've spent else where but that's ACCA hahaha

I got the same.... I didnot practice factoring and lease or buy at all ... i thought they would be easy.. it bit me on my back a little with that discount rate... and I had BPP practice questions ... didn't help with section a or b at all... lets hope I have done enough :)

Lease was cheaper according to my calculations. Well let's hope for the best.

Same ... didnot practice ... this one got me good ... although there is actually such question in one of the 2019 exam papers where you have to calculate the discount rate ... very similar question ... although too late now :) //

6% therefore recommend buying

I got 6% then i recommended borrowing to buy cos it was cheaper

I got 6% then i recommended borrowing to buy cos it was cheaper... 8.57% was before tax so i calculated as 8.57%*0.75= 6%..

I picked 12 v 18: 5.2 plus 1.5 interbank rate

I am not sure if it was just my own fault for not being better prepared, or if the exam was really difficult. Section c was relatively ok and any marks I lost their I am happy to admit is due to not having done enough revision and practice. But section a and b seemed extremely difficult... I doubt I am going to pass this one, but I've learnt my lesson now, next time I will work a while lot harder.

I was so confused what to do with section c working capital with inflation of 3%

Agreed with you. Section a and b was so hard.. but they made section c easy. I guess this is how they balance the paper.

Yeah I had 4.80 too

6% An after-tax cost of borrowing should be used

I’m glad it isn’t just me that had no idea

you are actually right. You use the 6% for both options because the assumption is that the after-tax cost of borrowing should be used for both.

Section A and B was quite confusing for me, even the non calculations type questions... I think I did fairly in my sections C. I got the long Npv question and the debt /equity finance question. The Npv was okay. My approach for the debt /equity question Recalculate pbit, interest and pat for. *current statement *with debt *with equity For current statement, with debt, with equity, calculate *interest cover *eps *P/e ratio *Po *terp. For debt : compare current po and adjusted po For equity: compare adjusted po and terp Also come their interest cover

I saw this question as well. It did not work so I had to further divide my answer by the nominal value and I got an answer. But it is really strange.

Hi Does anybody know how to Calculate the sales volume reduction in NPV calculation

I think we were provided with the pre tax cost of the loan. As that’s all they gave us, I used that (minus tax) to get to the discount rate I used for both calculations. This was a hard paper.