FM*** December 2023 ACCA FM exam – Instant Poll and comments ***

Anyone who found the question in section C which said discuss the benefits of rights issue or loan notes in a stock market. Did it require discussing both rights issue and loan not or you choose and discuss 1 only?

I took the question as discuss both?

I also said debt is cheaper than equity and listed the advantages and disadvantages for both and then discussed the optimum capital structure. I tried to obtain marks any which way I could

@katiewebb I also did both but someone I talked to said he did one because the question said discuss the benefit of equity or debt in a stock market. I am also confused. Because I discussed around 2 points for each for 8 marks if I knew it was one needed I was gonna put more points for one side.

@HJohns personally I think they meant to discuss both as one is equity the other is debt and for 8 marks not sure there would be enough to have wrote about for just one? I’ve done 3 mocks and done majority of the past papers on ACCA and believe that they would require to discuss both not just one but who knows I’m a doubting everything right now

Who remembers a section B question relating forex, regarding translation risk but was worded quite lengthy?

I got the exact question too and I was confused by the exact same thing! The buy decision was cheaper but the next question implied that leasing was cheaper.... I was soo confused.

Don’t think buy was cheaper in regards of the buy v lease question (Aid), I remember getting 353k for the lease and 653 for the buy, I know my buy Decision was wrong but pretty my lease was right. The lease was starting t0

Silly question but for the Section C Lease vs buy Q, where they discussed just normal depreciation, were we supposed to include it or exclude it? Because I assumed dépréciation that didn’t include TAD wasn’t relevant, I just excluded it, but now I’m unsure!

There are no silly questions! My approach was the same as you that without TAD it was not a relevant cash flow. Though I did use the depreciation to calculate the vehicles residual value at the end to year 4. 20% reducing balance and $122,880 written down value. I think the information advised that the WDV was the residual value I deducted the residual value from the out going cash flows in year 4 before discounting back to get the PV and NPV. From memory, my buy calculation was around 349k vs around 353k lease (same lease as Junaid's earlier post)

In section C I’m pretty sure it said don’t include depn for the buy which threw me off. Maybe makes sense why I had 653k for buying the asset dammittt, but Yh my lease was 353. The discount rate was 9% or did we all get a different rate? You think that’s about 2-3 marks lost because of my buy decision being wrong or would it be just one mark and the rest carried forward.

My calculation made it seem my lease was cheaper would I still get a mark for stating the lease was cheaper even though it’s wrong due to my calculation?

@crapants, in terms of depn why would we take WDV, when in the question it said it would be 20% of the asset value. Wouldn’t it just be 20% of the asset and populate in the final year?

@junaid98 my reading of the question was that they said the residual value was equal to the written down value in year 4 Though I am now not sure, and very much could be wrong. To be clear I ignored the depreciation for the cash flows and only used the reducing balance to calculate the value in year 4

Also, @junaid98 *I think* that you should only be marked down once for an incorrect calculation. So any comments and further calculations gain marks if they are correct but based on an incorrect calculation. Well I certainly hope so...

@katiewebb in Sec C qstn 2 part a or first part were we supposed to calculate gearing using book values or market values.

@HJohns I can’t fully remember the question but I’m sure it didn’t mention market value so I done the book value? How about you?

@katiewebb I did the market values. I used the market values given on rights issue. I think market value per share was $1.20. Book value per share was $0.5. There was also market value of debt (mkt value per 100 of bond) but I can't remember the market value of each 100 bond. But I know I did the wrong thing because someone said the question was similar to the one in the December 2023 mock and book values were used.

@crapants, my mind has gone blank on the TAD part, I don’t remember the wording of the asset value. But why would there be TAD on the depn, it was a not for profit organisation. So for the lease I didn’t include any tax payments. So why would we do WDV for year 4 buying the asset But I think your answer is right because you had a 4k diff which makes sense when doing buyvlease. There was always a small diff not a massive diff.

@crapants, did you get a WACC question too?

@junaid98 I think I am confusing the matter. There was no tad, as you say it was a not for profit organisation. But the way I read the question was that the value on disposal of the vehicle, in year 4, would be equal to the depreciated value at this point. I am now doubting my reading of the question was correct. I did get a wacc question but had left little time for it and rushed through. I managed to work through to get an answer that was around 13% I'm just hoping to pick up some marks on the second part of section c

@HJohns tbh by the time I got to that question my head went blank and I sat there for about 20 mins before I attempted the questions so I believe I completely messed it up. I know I done well on the npv question found it quite simple but the nominal and real rate I think I spoke about them the wrong way around and section a and b I done poorly so believe it will be a resit first out of 5 and gutted never felt I done so poorly in any of my other exams

@crapants, I see what you mean, it could have been that but just don’t know why would they ask that when it’s NFP. If they did just a stupid requirement to see if we can do the calculation I guess. Your WACC was 13% should be right, I got that too, there was CUM div for ordinary shares and if I remeber they slipped in 20x7 instead of doing 20x6 for ordinary shares, remember any of this ?

@crapants, also within the WACC there was share redemption, I didn’t take the share option I used the nominal loan note value instead

For the WACC calculation, who used nominal value of loan notes instead of the share option?

@junaid I was running out of time and knew I didn't have time to calculate the share option so just ignored it. Not great but it meant I managed to finish my WACC calculation. Also I cannot remember if I used market or book value for the debt and equity. My brain was pretty done by that point. Fingers crossed for a pass.

I had the same section C, Did you get that AgeAid purchase PV was cheaper? I did but the the next question seemed to imply lease was cheaper

My also same Answer