*** F9 December 2011 Exam was: Post your comments and vote in Instant Poll ***

Hi Guys,
I wonder if any one can recall the different parts of the questions and allocation of marks for each part.

Thanks

Q1 Volume – 100,000 units
Selling Price – $16
Variable Cost – $11 /unit
Fixed Costs – $ 160,000 per annum
Cap Ex – 800,000
Residual Value – 40,000
Working Capital – 90,000 (is needed in year 1 )
TAX at 30 % – In ARREARS

NPV – ?

@sanjarbek said:
I calculated WACC being 9.13 % ?
Factor with recouse: benefits: $206,000 vs costs $193,000
non-recourse: benefits: $294,000 vs costs: 298,000

for non recourse, the cost is more than the benefit? i have got net benefit for both factoring arrangement

@sanjarbek
correct.
by the way in the last question bonds were to be issued or redeemed

Q 1 NPV £104,700
Sensitivity allowance meant that any slight changes to sales or variable costs would mean project not worthwhile
Q2 93 days cash operating cycle
Q3 WACC – 9%
Q4 Ex rights issue $7:20
I’ll try to to remember some more

nogoodboy

i got 50700 on npv wonder how you got 104700
cash operating cycle i also got 93 days
wacc 9%
ex rights 7.20

pls expalain how you got 104 700

what rate did u discount the cash flow

@nogoodboyo said:
Q 1 NPV £104,700
Sensitivity allowance meant that any slight changes to sales or variable costs would mean project not worthwhile
Q2 93 days cash operating cycle
Q3 WACC – 9%
Q4 Ex rights issue $7:20
I’ll try to to remember some more

Good i feel better now 🙂 Except my Q3 Wacc was a pile of mince.

Was it not 11%?

I wrongly started putting in the 10% values and then realised 11% was on the next set down of the value tables.

Sikander probably forgot to add back to working capital in Y5

@05008967 said:
Was it not 11%?
It must be if we had same
I wrongly started putting in the 10% values and then realised 11% was on the next set down of the value tables.

Sikander probably forgot to add back to working capital in Y5

on q1 who ever got npv +104700 made a mistake by adding the 6th which was -54533 negative

Cost of Debt
Years 1-6 $8 & discounted at 4.767 = $38.14
Year 6 $100 discounted by 0.666 = $66.60
Total = $104.74
Then IRR

@sikander1985 said:
050089

please advise how you got +104700 i still dont understand

The cost of capital was 11%
you needed to release the Working capital in Year 5
and i am sure you are to include the tax from Y6 – this is still part of the project. Anyone agree/disagree?