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everyone is talking about calculations but the reality is its 50-50 written and calculation paper. LOL
what u guys wrote on Interest rates and receivables policy??
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do we use real rate in q1 ARR?can someone reply this tome
@myaccca said:
everyone is talking about calculations but the reality is its 50-50 written and calculation paper. LOL
what u guys wrote on Interest rates and receivables policy??Interest rates mentioned Internal (smoothing & matching) external (futures & hedging), for Q1 just about whether people can afford them and their Cost of capital will increase etc.
AR- mentioned they need a policy in terms of a framework, assessing credit worthyness, credit control, debt collection and foreign receiveables.
to find ARR, we dont have to discount, we should find average profit .
i had confusion, i think i made mistakes there. i divided by 5 , may be i t should be by 4.- Topics: 0
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about q2a, I think it accepted with net profit. receivable period reduce from 60 days to 41 days? anyone have answer like me?
@thuyliem said:
about q2a, I think it accepted with net profit. receivable period reduce from 60 days to 41 days? anyone have answer like me?i got same
LOL I had a small loss of about 3,300 had the days of about 42 cos I rounded it up.
I can’t remember on q2 which part I accepted the proposal on, I definitely declined one offer due to the cost of the discount offered.?
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@thuyliem said:
about q2a, I think it accepted with net profit. receivable period reduce from 60 days to 41 days? anyone have answer like me?YEP ME TOO
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@suganya25 said:
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 commendsQuestion 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
Code:thebr 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 🙂Q1 absolutely the same results
Q3 WACC 9,7. I didnt include o/t, but it was 15m and was worth to include it..
AR reduced to 41 days.. net benefit from providing discount 48050- Topics: 0
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@aataro003 said:
Q1 absolutely the same results
Q3 WACC 9,7. I didnt include o/t, but it was 15m and was worth to include it..
AR reduced to 41 days.. net benefit from providing discount 48050Oops, so we gotta include o/d?
Yes AR reduced, savings on overdraft interest but the cost of interest allowed was higher than the savings on o/d interest resulting in a net cost..that was my answer, did I mess it up?- Topics: 0
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What abt the question on market value WACC vs book value WACC? What to answer?
i think i really messed up q.no.1
fixed cost actually were fixed investment costs.
my taxable profit were wrong if it is fixed investment cost.and again in ARR,
i considered time line starting from t0 to t4, so i took it as 5 years period. so i divided by 5.
i deduct depreciation to find avg profit.
to finfd avg capital, i included fixed investment cost .can anyone comment on this.
if u remember .from q.no.1 10 marks gone for sure.
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@vipin70 said:
i think i really messed up q.no.1
fixed cost actually were fixed investment costs.
my taxable profit were wrong if it is fixed investment cost.and again in ARR,
i considered time line starting from t0 to t4, so i took it as 5 years period. so i divided by 5.
i deduct depreciation to find avg profit.
to finfd avg capital, i included fixed investment cost .can anyone comment on this.
if u remember .from q.no.1 10 marks gone for sure.
What I did was, I calculated the inflated contributions for both the house types and deducted it with inflated fixed cost. That was my taxable cashflow. I deducted the investment cost of $4m from yr0 and tax paid for yr2 to yr 5 and same for the tax claim. That gave me net cashflow which u discounted with the nominal rate to get
v. Arr was calculated with the taxable cashflow for the four years minus full depreciation of 4m to get total profit and divide by four years to get average profits. Avg investment was two million. Avg profit over avg investment multiply by 100 to get the arr which was higher than the hurdle rate.- Topics: 0
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am i right to use the real; cashflow and the real discount rate? overall i think the exam was very very lengthy!
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@suganya25 said:
Oops, so we gotta include o/d?
Yes AR reduced, savings on overdraft interest but the cost of interest allowed was higher than the savings on o/d interest resulting in a net cost..that was my answer, did I mess it up?I will try to memorise the structure of my unswer
Current rec days
365*2465/15m=60 daysRevised receivables days
(0.5*30)+(0.3*45)+(0.2*60)=41Current receivables=2465
Revised = 15m*41/365=1684
Saving on interest= 2465-1684 * 0.06 (o/d int)=46860
Cost of discount= 15m*0.5*0.01=0.075
did i miss smth?
agree with suganya25. thats what i did. deducted inflated f/cost from contribution.
I showed the fixed inv costs as a fixed cost in years 1-4 and I inflated them By 2% per year, I have a feeling it should be more complicated than that cause the question was worth 12 marks.
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LOL )) i missed up rounding )))
U are right )) damn it- Topics: 0
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I wouldn’t comment on that my NPV was negative some how. my ARR was wrong so again no comment on q1
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