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I got the same one, I add it back depreciation n ended up with a negative NPV, not really sure if thats correct, I didnt see any question like this in previous exams…
I got that and I answered investment bank. Wasn’t in any of my study texts or lectures so I guessed. It made the most sense to me.
I got it too and I just discussed aggressive, matching and conservative policies & short-term and long-term funding of fluctuating and permanent current assets. I don’t think I wrote enough for 7 marks though!
No we haven’t. I added it back too. I think that was correct because depreciation is not a relevant cash flow but in the end I found a positive NPV..
I got this question. MS receipt to 300000 so you want to sell MS and buy dollars in 3 months. Dollar receipt using forward rate 300000 / 1.1125 = 269663.
In money market hedge you will borrow MS and deposit Dollars. The interest rates given were annual rates so need to divide by 4 to get 3 month rates.
I hope I got this right.
if FRA starts in 3 months and the loan or deposit will be for 6 months lets suppose, then FRA rates will be quoted as 3 – 9 months 1.32 – 1.3. For borrowing take the higher rate. I don’t remember the exact interest rates I m just explaining the concept.
I got the same question added back depreciation. But I am confused about residual value. Was it to be added back or not at the end of the project. I think I got this wrong
I think that we should always add back the residual value at the end, shouldn’t we?
Hi, do you know which 2019 paper that is?
I am attempting my fm exam on 18th and i would like to practice it.
Thank you.Thought it was difficult. My Section C went OK…Lease vs Buy and Factoring.
I don’t think my section A and B went well at all. The FRA question in section B was horrible, I never revised it & couldn’t remember a thing about it.
I really hope I managed a pass!The section C factoring question caught me on the back foot.
I initially started calculating the overdraft interest saving from receivable days reducing from 71 to 35 based on the total receivables, completely missing the part about 80% of the invoices being advanced until after, so my workings will be fairly scrappy and I’m not sure I got the correct end result but I had it that the company would be out of overdraft with all the interest saved.With the fee and the 5% advance interest the factor would charged, I found it to be not financially viable due to the savings from administration, interest and lower bad debts being too low.
Also, on one of the follow up questions about the affect on the operating cycle, it asked about the impact if the factor was taken up, for which I just reduced receivables days down to 35 without factoring in the advance which I now think was incorrect.
Wished I’d spent more time revising factoring, specifically payment advances, but as others have said, it seemed so niche/straight-forward in the syllabus, it was easy to neglect.Interested to hear other’s thoughts on this question.
yea, the PAT will be lower but the EPS was higher with debt than with the equity funding due to the right issues. I don’t think there is a particular right answer, I think it depends on the perspective you look at it from and how you defend your advice
i have my fm exam on 18 . can anyone help me in the areas that i should focus on. or any tips that you can give
Hi
What kinda Question is Expected NPV with Variable cost using ProbablitiesPlease help me out.
Regards
Focus on the section c first , as the mcqs are tough. Don’t leave any topic revise everything. All the best !!
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