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oh dont worry there is only 1 mark for that i believe……anyway i wish you to pass this exam there were plenty of other easy marks in that exam 1 mark is nothing 🙂
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can anyone remember if the Early Settlement Discount was offered to us by the supplier or we offered it to the customer?
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ohh great! Cause i read a post saying that we offered it to a customer and got confused for a second. Thanks!
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Yah, I also got a 11.24% WACC. The paper was generally do-able. But as usual, I ran out of time (I did question 3 last). Question 3 was soooo tricky, I couldn’t remember how to handle buffer stock. In Qsn 2 I forgot how to ungear and gear the beta factor so I did the calculation half way. I am also praying for a pass on this paper, I was repeating it.
What did people get for growth 4% in 2a for div growth? And cost debt using irr i got 5%? Anyone got same?
Also how many marks was it worth?
OMG i did the cost of debt wrong how could i miss that . did only the after tax cost of debt and didnt apply IRR…. how stupid of me was that
Ke: 13 i found and wacc : 12 kd: 5.6 i think hopefully its right, working capital objectives: working capital policy, terms of trade, nature of business, operating cycle.
Dividend growth model vs capm : g constant, risk, capm is the best one in the end.
Factoring and invoice discounting: expert, admin saving vs….
Project specific discount rate found 9 %
In Q3 part b
i did like $1 *456000 = 456000
if accept discount
$0.99 * 456000=451440
(451440*5%*30/365)= 1855
if accept cost is 453295Net saving 456000-453295= 2705
can anyone tell is it true???
Ayaz i missed that part confused and was running out of time. 🙁 i messed up question 3. I feel i smacked question 2 though some hope.
@Ayaz how i did it was: 456×60/365 =74959 new payables were 456000×99%x30/365=37105
reduction in payables 74959-37105= 37854. this this needs financed as we are paying early than 37854×5% =1893 cost
benefit is (456000×1% disc) 4560 net position 4560-1893=2667 accept as benefits higher than costsPeople tell me please when doing growth from 2010 to 2013 did you get 4%??
Then use Ke formula
Kriselda in Q3 part b
we have to cal net benifit
i did like if i accept the discount so i have to bear the principle amount which is 451440 after discount
and the opportunity cost which is 1855 because we are loosing interest income for 30 days total cost will be 453295
if we do not accept discount principle amount remains same 456000… difference is the benifit….I did very well written. Notice reading here calcilation silly mistakes… will i still have chance? Like say calculations i forgot to (e.g. inflate 4.7 power of 2 3 4) would i get method marks somewhat or all wrong??
My equity beta as far as i remember was 0.89….and as for Q4 i did
Lease
Lease payments were (155000)x annuity factor of the short term borrowing it was 7 % i believe im not sure, but since lease payments were at the beginning of the year than annuity would be 1 (for year 0) + 4 yrs annuity i think it was 3.36 not sure though, therefore 155000×1+4.36= x amount
borrowings to buy
750000 x df of 1=( 750000)
maintance cost 20000x annuity factor of 7% 5yrs
scrap value (i dont remember the value) say 10000x PV
total all those up and get the amount of more than 750 000
lease was cheaperDid u get both positive NPV? Real and nominal? But diff figures each one? I said accept to both projects?
Positive NPV for both real coc was 7% , Wacc was 11.4% and Q4 lease was cheaper .Hoping for a pass
Did we have to work out the EAC for buy or lease?
The question was quite misleading as it didn’t mention how many years the lease payments are made! perhaps I didn’t see it, did you?
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