*** F9 December 2012 Exam *** Instant Poll and comments***

Fixed costs i believe should have been included as they would not have been incurred if the houses were not built and therefore they are a relevant cost.

I thought the last question was very difficult 🙁

I think Q4 was …Calculation and discussion on MV, NA, P/E ratio a DVM/ DGM Valuation methods, Debt / Equity Ratio on MV and BV calculation and discussion of benefit of using MV

Fixed cost to be deducted by 1500 each year but not inflated fix cost.

Hi everyone.
q1 ARR=28 %. did anybody else got that. btw very lengthy paper.

Too much difficult calculations So much theoretical element as well

oh i missed forex question. prepared it really well.

what about 2nd que. regarding purchasing in bulk.i got net benefit of about $8000+ with receipt of discount. of 1%.

1) I had NPV of about 277,000 if memory serves lol- I included the fixed costs as they directly relate to the project and are not apportioned or allocated.

2) I rejected the new receivables process had a net loss of about 3,500
I accepted the discount on the EOQ question as the holding cost was very cheap

3) I had WACC about 9.7% equit 10%, preference 8%, bonds were 5.7% and bank loan was 4.2% I THINK not 100% on that was a big calculation,

4) Bloody toughy hate the business valuations.

Think I just did enough though.

I completely messed up with Q3 and 4, anyone know how to deal with the bond?

Q2a not sure, seems toe easy straight forward (probably wrong again)

couldn’t work out wacc coz dont’ know what to do with the bond, guess figues n put in wacc formula. urgggg so angry with myself!

and debt/equity do you use d/d+e or d/e and give percentage. arrrrrrh could just hang myself to avoid/get rid off my own disappointment in Feb.

in one of the Qs, I couldn’t get growth rate for -> g=br, b=40 x 9%

@vipin70 said:
very easy paper
no calculations on forex, no analysing of finacial statements with ratios, which i hate.

all qns were straight forward.

only area i struggled were relative merits of each business valuation methods. (8 marks).

Npv around 550 k
ist qns.

2nd
benefit of 14k if we choose cash discounting

3rd
WACC 9% including overdraft, i didnt do WACC without overdraft. overdraft was 15 m.
preference share 12%
convertible debt 5.78% approx 6%
equity cost, 10%
overdraft 6%

4th
question no complicated calculations.

With all respect your answers seem to differ from everyone else’s on here- especially question 1!

cost of preference shares also i forgot

F9 was quite a demanding paper in terms of time management.
I feel that the paper was manageable esp the calculations but the theory portion was…no commends

Question one: Npv was $266, arr was 28% so proposed investment is financially acceptable. I accounted for the fixed cost too. Part c about interest rated and capital investment decision? No clue. Part d was on factors to formulate AR policy.

Question two: AR policy was net cost. Inventory was net benefit. Optimum cash was in miller Orr model.

Question three: wacc was 9% I din include overdraft, must we? Benefit of offering convertible debt to taking up bank loan, I touched on flexibility and redemption. It was from the company point of view. The last part on interest rate hedging, I mentioned smoothing and fra.

Question four: biz valuations, I got a little confused on

br model. It’s the proportion of retained earnings right? I took the (pat minus div ) divide by pat to get the proportion and multipled that with the ke value given in ther question.to get the growth rate. Then I applied it into the normal dvm equation. Hope I’m right. Merits of the valuation mtd, I wrote abt the techniques used, their pros and cons, whatever I cld rmb fr today morning’s last minute revising. Cost of debt, was irr mtd. Debt to equity ratio decreased to 13% so the company’s gearing improved ie financial risk is lower.

Whatever I cld recall…
Hope to pass this paper, can’t wait for my P-papers next sem 🙂 ALL THE BEST GUYS 🙂