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Hi John,
I am having some trouble working out the ex-dividend share price, capital gearing and WACC from the scenario given. If you could please provide clarification as the solution does not provide an explanation of the workings.
Thank You
NeeshalYou will have to be more specific about what your problems are.
I assume that you have watched all of my free lectures for Paper FM before attempting the question? There would be no point obviously in attempting it without studying first, and my lectures are a complete free course for Paper FM and cover everything needed to be able to pass the exam well (including, obviously, everything needed to be able to answer this question).
I do hope that you are not intending to prepare for the exam by just looking at questions on the ACCA website. This exam is harder than any exams you may have taken at university, and you must study first (either by watching our lectures or buying a Study Text from one of the ACCA approved publishers) and just practicing the questions on the ACCA website is nothing like enough – you must buy a Revision Kit from one of the ACCA approved publishers and you must work through every question.
The specific problem is that I’m not clear on how they derived at the answer to the ex-share price given the dividend growth model as i do not seem to be getting to the correct answer.
Of course, i am well aware that study is required before attempting question practice and i have watched all the lectures provided on OT, given this will be my 9th ACCA exam i will be taking. Yes i am attempting both questions from the bpp p&r kit and the ACCA CBE specimen questions as this will be my first attempt at a CBE style exam and need to get a feel of the style of how the questions and answers should be structured.
But I have already answered your question here:
https://opentuition.com/topic/f9-cbe-specimen-acca-website-question-34-section-c/
The rest is simply calculator work:
MV = (50 x 1.04) / (0.124 – 0.04) = 619.05 cents
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