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Does somebody remember any of your answers to crosscheck?
Don’t know if it’s a good idea as nothing can be done now but still…9am -12pm
Q1 –
Reasons for unsuccessful acquisition and methods for resolving this (in given case)
-Estimation of value per share of target company before acquisition
– Estimation of number of shares to issued against share for share purchase
-Percentage gain for shareholders of each entity
-Likely reactions of shareholders of each entity
-If purchase is made through cash then dividends will be reduced from 50% to 10% how shareholders of acquirer are likely to react to this.Q2 -Benefits of centralised treasury department
Interest rate derivatives, FRA, futures, options, A term *Smoothing* was asked for three marks.Q3 –
-NPV calculation with an option to delay
BSOP input variables
-use of above information
-Why NPV and BSPOP value are different, advise financial officer13 pm – 16 pm
Q1-
Estimate gain to shareholders through cash vs share for share
Method to value individual and combined- FCF
Impact of each offer on financial performance and likely reaction of shares
Ethical issuesQ2-
APV calculation
Advantage of APV
Factors determining credit ratingQ3-
Adv of centralised treasury
Interest rate risk hedge through FRA futures options
Interest rate SmoothingToo close to call. It was mostly direct questions but the first aquisition question was information overload. Could have scored more if I hadn’t kept it for last. The APV and hedging questions were direct but it all hinges on my calculations being error free.
I feel like I’m going to get somewhere between 45 and 55.Q1 M&A as described above in the thread
Q2 Interest Hedge – FRA, Collars, Futures, smoothing
Q3 NPV/IRR/MIRRhow do you thiink how many marks can be lost if I put Initial investment in NPV calc to Y1 instead of Y0?
I was expecting a positive APV so thougg I had done something wrong. I discounted the cash flows at 12% and finance costs at 8%.
I also discounted the cash flows at 12% but discounted the APV stuff at 3.2%,did you tax your cash flows?
I couldn’t decide between 8% and base rate, but I think both are acceptable. Yes, taxed tax profits abs calculated tax shields
Yeah both should be acceptable I wish I’d stated that on my paper haha. And I remember on the APV question that the cash flows were already poat tax but who knows anymore
JakeDoughty wrote:Negative NPV about 13m , negative APV about 2m I think. Did you?
Somewhere in the vicinity I think.
JakeDoughty wrote:GRA 6.3, futures 6.31 options 6.6. You?
FRA fixes the rate at 5 point something right? I hadn’t revised this part well enough.
Futures and options effective interest rate were mightily close, with options slightly worse. I’m probably wrong.For the interest rates question did we have to exercise the put option? I found that there was a gain on the FRA, futures and options. Not sure if that’s correct though?
Who got Interest Rate Hedge for Receipt?
Do you remember your answers? Collars/Futures/FRAWhat did you get when calculating the Estimate gain to shareholders through cash vs share for share?
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