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It asked about the conversion value.
The loan note was redeemable at a 20% (can’t remember exact number) premium, so I did 120 = 25 x share price. There was no growth rate mentioned for the shares.
So I got $ 4.80 a share.
I added it back in Year 4, and wrote on the assumption that the project doesn’t continue. The question did not state it, so that’s why I wrote the assumption.
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%
How did people answer the impossible section C question about choosing equity or loan to finance the $15m investment?
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.
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 equityFor 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 coverI 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 calculationI 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.
Working capital? I don’t remember seeing that in my NPV question. Hope it was a different question otherwise that’s a couple marks lost 🙁
I also got a negative npv , arnd 300000 something, the equity question was hard I also just did a few workings
Lol ACCA ehnnnn!! I spent too much time on the 2mrk questions too.. But finger crossed
1) NPV: wuth specific inflation, inflation of working capital, TAD (I got negative (minus 54k)), question about recomendation concerning this project,
2) strange task about how to finance project: loan or shares. There were given the last rows from Profit and loss report. So i have calculate % when company use loan ahd how the profit will change in this case. Question about systematic and unsystematic risk.This question was confusing, I kinda did the same ,calculated the difference betwn profit for the year , as in how it is impacted by increase in finance costs , although the ratios didn’t go to my head, anyways hope I got a few marks , nd did u calculate the theoretical ex rights price for the rights issue ?I think I got $6 .
I were doing it through the last 10 minuts )))
I counted the profit when the company use loan. We know that the profit before interest and taxes +20% and I got that if conpany do the loan, the profit will be 2k and before the loan it was 8k so it is not a good idea to take the loan.
If the company issue shares the profit will increase as there are not interests.
You?
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