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I had the same exact, I had a WACC and lease and buy,
I remember something with shares in the wacc where I just froze and couldn’t figure it out and used the nominal loan note as redemption. I got a wacc of 13% not sure if this is right. What did you get?
With my lease and buy I had buy at 635k and lease at 353k both negative but feel like I went wrong somewhere. So annoyed!
I had the same exact, I had a WACC and lease and buy,
I remember something with shares in the wacc where I just froze and couldn’t figure it out and used the nominal loan note as redemption. I got a wacc of 13% not sure if this is right. What did you get?
With my lease and buy I had buy at 635k and lease at 353k both negative but feel like I went wrong somewhere. So annoyed!
From memory I had the same or very similar lease for AgeAid but my purchase cost was something around 5k less than the lease cost. (Outlay + maintenance + other costs – gain on disposal)
In the end, as is the case with me, section c part 2 is always rushed. Which was the WACC
I managed to get a WACC answer off but sure it’s not right.Was one of the preference shares or loan notes where convertible?
I didn’t have time to look into this and focused with having al least a resemblance of a full calculation.I am assuming that if there was convertible debt/loan notes that it would lower the cost of debt and the WACC
But should the development costs have been amortized? I think that they should have been but there was no indication of how so I added them to the reducing balance TAD. I also added a tax rebate T1 but perhaps that should have been added to T2?
I got the same, very fiddly with the trade receivable movement. I got option 1 discount at 202000 loss and factoring at 17k benefit
I remember that I flagged it but can’t remember outcome I ran fishers formula twice once at 12 moths and once at 6mths
I did the same thing. But the second part of the question on real interest and nominal interest was didn’t have much to say for 8 marks.
The business valuation question in section B was okay but did it have any calculations? I don’t remember any calculations from that question. If they were calculations please remind me.
Thanks Robert, maybe I didn’t depreciate the vehicles enough to get the residual value on disposal
What I did may be wrong – that’s the problem with too much analysing after the exams finished – you assume you’re wrong and everyone else is right!
I had the same result with Buy V Lease but when I was checking over my answers I figured out that you weren’t meant to include any maintenance costs for the Lease, the way it was worded makes you think they incur the same maintenance cost, but it says the ‘lessor’ incurs them so the lessee wouldn’t. I wouldn’t worry too much about the end decision you will score marks for inflating sales, variables etc
Also the exam gave a lot of clues to other questions. I had a multiple choice question on the benefits of leasing assets, which then basically answered a Section C question which asked the benefits of leasing! Overall happy with the exam, WACC and Lease v Buy in Section C and money market hedging and valuations of convertible loans in Section B. Things I really focussed on in the days before exam. Section A was always going to be tricky. BPP Revision Kit is essential to passing these exams.
Also got 13% WACC. Around 14% equity, 7% pref shares and IRR of 7.9% for debt. Market value of company was big!
Section C
I failed to include Development costs as part of Initial cost although l adjusted them for TAD 25 % .I don’t think the development costs were meant to be included? If it’s already been spent it is a sunk cost? Not seen it in practice questions but I was on the understanding anything that has been spent prior to the NPV calculation should not be included
Asheimi97 – it was a money market hedge question. They were due to pay the foreign currency so they borrow dollars now, convert it to the foreign currency then place on deposit. In 6 months, the deposit matures which they use to make the payment. You have to work backwards with this one using the interest rates to calculate how much of the foreign currency needs deposited then you can work up to the dollar value. Studied this so much to try and understand it but there were only 2 marks available so wouldn’t worry about it too much
josukegiorno10 – this one stumped me too I flagged it then came back and think I cracked it. You use the year 1 inflation rates and use the formula
My buy and lease question was quite tricky, it was 300k initial investment, and 12k for maintenance that increased 20% 30% and 40%.
When inflating these values I’m pretty sure it said to inflate from previous years. So for example 12k the first year, then 20% which made it 14400 for the second year and then 30% of the third year etc
@leep2310, the WACC question did have a big MV, did u use nominal value of loan notes instead of the share option?
And with the buy v lease, I remeber the maintenance costs starting as 12k then inflating 20% 30% 40%, this got to me I just froze. But Inflated the 12k by 20% for y2 then inflated y2 figure by 30% plus y2 costs if that makes sense.
So annoyed because I missed out a few theory questions due to time and hopefully banking in these two calculation questions or I’ve failed ?
@leep2310 with Section B I had business valuations in regards to loan notes to, but I picked the answer of 93.05 which I think is right.
Had an ordering policy question, but remeber putting down 31500 which I couldn’t get my head around and which I practiced so much. What a fail!
Did you get anything similar?
Also had a money market hedge, think the answer was like 84k approx
@leep2310 yup that question took up so much of my time. I got the first option as my answer but I have a feeling I did it wrong after I discussed it with another person on the ACCA Reddit page. I time apportioned the second-year inflation rate but failed to use the first-year rate.
@junaid98 I agree with you. I also got 93.05 as my answer to that question.
I was also kind of disappointed in myself when I couldn’t nail down the answer to the inventory question. I was baffled for a while, but I think I got something like 63500, but I believe it’s wrong.
Strangely, I do not remember the money market hedge question where we had to type out the answer. I remember solving one right after doing the purchase parity theory, where they had given the option. I thought that was easy.
Does anyone remember what they chose in their first question of Section A? And also the one where they had to choose increase, decrease, and unchanged options for earning, dividend coverage, and gearing?
Yeah I got 93.05 too because the redeem at nominal was higher than the conversion. There was another loan note valuation question before that too. The ordering policy you had to calculate the EOQ which was 90,000 then work out the current reorder and inventory holding costs then do it again for the EOQ. The benefit was around 70k.
The first question in section A was the creditor hierarchy if I remember correctly. Secured, unsecured, preference shares then ordinary shares. This gave another clue to a section C question about the creditor hierarchy being linked to pecking order theory. Debt cheaper etc guaranteed payment whereas dividends not guaranteed. The increase, decrease and unchanged question was hard. I done unchanged for EPS, increase for profit retention and decrease for gearing
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