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

Many Students are confusing about Factoring….8 Marks for calculation…….NOW 1) With Recourse …2) Without/non Recourse
In With Recourse “Bad Debt” ….The ultimate Responsibility is still on Company not on Factor CO’…..it doesn’t mean the decrease in bad debt is not yours benefit as like 9% to 6%……the benefit will only Decrease…………

2) Without Recourse……means All Bad Debt is now Factor CO’ Responsibility not the company who hire them……..Explanation !!! if factor providing you services on Without recourse BASIS……NO matter how much bad debt you have 20%, 30% , 40%…..Its not your headache ……its now on factor……….In The Exam Question The ultimate benefit will be now, that all your Bad Debts which were 9%…….ALL IS YOUR BENEFIT THE WHOLE 9% BAD DEBT…….thats why factor charge premium in this service ….

In both options it was positive , but in “Without Recourse” its benefit is 158% higher than” With recourse” basis……..as i explain above …In without recourse the whole bad debt was your benefit……thats why it was higher………
Hope you Understand…..

well for me q1 was the best npv question ever! went blank at first but just decided to do it as the requirement stated it. hoping for at least 20 marks

q2 was alright only messed up my cal on factor a bit. in recourse got higher cost than benefit, while in non recourse got more benefit than cost. though calculation may be slightly wrong but hoping for atleast 17 marks
q3 did almost everything right but i notice that wen cal wacc there was a bank loan and a bond. used irr for bond make pre tax to post tax for bank loan etc.
dvm , talked about limitation and assumption briefly!other method was capm and risk adjusted wacc. hoping for 17marks

q4 was ok but not perfect by a mile did not finish but raised only7 points for q4 d and did very little part of the analysis but overall hoping for 13 or 14 marks

i think it was a really fair paper