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Dear All,
Unfortunatelly, I opened a booklet before it was allowed to do so just to see how it looks like. It was my first time I was taking acca so I was stressed and didn’t note that it was not permitted. Unfortunatelly very silly mistake, I know.
Probably some of you knows what the cosequence it might have on my final grade ?
How many points will they withdraw ?@sobieski said:
I messed it up a little…
A just skipped the first question and forgot about it. when revising the questions I realized I skipped it! In the last 10 minutes tried to write anything…however…i think 10 mark are lost.
The question was not so hard, though…
The hardest for me was the 5th..On the multiple I got:
1. B
2. A
3. A
4. A
5. B
6. D
7. D
8. C
9. C
10. D
11. A
12. A
13. B
14. C
15. A
16. A
17. B
18. B
19. A
20. Atoo many “a”s….))
Q 1 – as said above – said only about the semi strong market. skipped the IRR for redeemable debt…calculated the ratio without it..
Q 2 – I got that forward was cheaper… You borrow dollars to buy pesos to put in bank and at the maturity you just pay the supplier.. b) it was about futures (almost confused it with forward) – it is cheaper, can be sold on the market, are not obligatory, though not so flexible….
Q 3 – The discount policy is to be chosen – it brings benefit to the entity. I included the 10% profit margin for the sales volume difference (i guess was 20% increase in credit sales). If you exclude it – it is negative. It wrote that it shall be included, as the competition is fierce and the above profit is opportunity cost if not used…
b) About foreign clients – Wasn’t they asking about credit risk and not fx risk? I wrote that the best was to diminish risk is to ask for advance payments / to have a bank as an intermediary and to get a good credit risk department if the main business is export based.. (if it was about fx, then I’m screwed)Q 4 – The sales price / cost shall be inflated starting with the first year. Fixed cost not inflated. Included the wacc movement only (no initial balance). Tax calculated on depreciation. Got a positive NPV. I wrote that they must consider maybe a better machine, as the last two years it was working on full capacity (400,000), so maintenance costs could get up as well as maybe some oportunity costs could arrise… anyway, not important.
b) the term just got out of my head ….said “hard and soft limitation of financing” instead of “capital rationing”…hopefully the characteristics are correct and will get some marks..Q 5 – first started with part b, as wacc is my achilles heel…
part a – “i have no idea what I’m doing”. After I realised I skipped question 1, got panicked don’t remember what i wrote….Hopefully will get good MCQ and 2 / 3 / 4 right and get the pass rate….
It explicitly stated inflation applied to fixed costs!!
Any other MCQs?@bohdan.yaremk said:
Dear All,Unfortunatelly, I opened a booklet before it was allowed to do so just to see how it looks like. It was my first time I was taking acca so I was stressed and didn’t note that it was not permitted. Unfortunatelly very silly mistake, I know.
Probably some of you knows what the cosequence it might have on my final grade ?
How many points will they withdraw ?Did invigilator said anything? no? so don’t worry !
@dreamscars said:
pretty sure the finance cost is benefit right? since receivables have reduced and you saved finance cost from having cash from receivables.Actually I thought not because as I read the question, the receivables days remained at 51 before and after the discount.
Since the discount led to increased credit sales the finance cost would be greater after the discount.
I may have missed something here though I must have looked through the text at least 10 times for a new receivables day figure
@bohdan.yaremk said:
Dear All,Unfortunatelly, I opened a booklet before it was allowed to do so just to see how it looks like. It was my first time I was taking acca so I was stressed and didn’t note that it was not permitted. Unfortunatelly very silly mistake, I know.
Probably some of you knows what the cosequence it might have on my final grade ?
How many points will they withdraw ?I don’t mean to be rude /mean but even if it is your first ACCA paper, surely you should be familiar with how exams work?!
How are you doing F9 if this is your first exam? Did you get exemptions? If yes, you must have taken exams before in your life? You should know not to open papers beforehand.
You think everyone else around you were just sitting there for the sake of it and CHOSE not to open their paper, whilst only YOU sat there and read through the paper?
I’m sorry, but I don’t believe an ACCA student can be that naive, or is it just me?
Pretty sure you are just trolling
@chris165 said:
Actually I thought not because as I read the question, the receivables days remained at 51 before and after the discount.Since the discount led to increased credit sales the finance cost would be greater after the discount.
I may have missed something here though I must have looked through the text at least 10 times for a new receivables day figure
Credit discount will decrease Days to 30 for 75% customers.. and overall affect decrease in Receivable
@ehsanshah said:
Credit discount will decrease Days to 30 for 75% customers.. and overall affect decrease in ReceivableTrue but to calculate the finance cost you need to know the number of receiveables days before and after.
Just because 75% of customers pay in 30 days doesn’t mean average receiveables days cannot remain at 51.
@chris165 said:
True but to calculate the finance cost you need to know the number of receiveables days before and after.Just because 75% of customers pay in 30 days doesn’t mean average receiveables days cannot remain at 51.
I get what you mean, but I think we were supposed to assume that the remainder 25% stays at 51 days, I don’t think there was anything to indicate anything different
The receivables increased due to the increase in revenue. Receivables from 24-28.8m. But the reduction in days was for an industry average. I don’t recall our company offering 30days. However I must admit i possibly missed this. I calculated the reduction in bad debts, added admin costs and cost of discount and hit all that with the COC. The question was information overload to be fair. A lot of unnecessary gibberish to jumble around numbers.
@misschile100 said:
Yes I did inflate themJust for clarifying. I hadn’t known there were two ways of doing this one, one of them is the one you mentioned. The other one, the one that I’m familiar with is to calculate contribution without inflation, then discount the cash flows for each year using real rates. It’s a win win situation for us. Yipeee!!
After reading your comments I was afraid that I might be wrong so I confirmed with dec 2011 paper.
@ehsanshah said:
You need to take assumption here… 75% will take discount and pay in 30 days.. + rest 25% will pay normal.. soo these two add up make receivables after discount…This sounds correct. Adjusting the days is something I forgot on the 75% uptake. Rookie mistake. I know my adjusted AR is wrong anyway yippee. Lol.
Hi guys,
Did anyoene put net reasible value as the answer for 13 or 14? And what about mcq no. 5 and 20?
@ehsanshah said:
Credit discount will decrease Days to 30 for 75% customers.. and overall affect decrease in ReceivableExactly what i did, assuming that 75% of customers taking up the discount will mean that 75% of customers will pay in 30 days.
2880 x 0.75 x 30/360
and the rest remained at 51 days.
2880 x 0.25 x 51/360
I remember MC20
That was Dividend 4 years ago = 0.12, Div now = 0.17, cost of equity = 11%
So g = (0.17/0.12)^(1/4)-1 = 0.091
and Price = (0.17*1.091)/(0.11-0.091) = $9.76There was an Mcq where equity beta of one company was 1.2 the target company’s beta was also given so did you take 1.2 while calculating Ke??
How much does the bank have to pay company, annual interest is 4%. options are 45, 50 k. I don’t remember the rest.
what’s the right one?? I guessed it as 45 k
Forward hedge was acceptable since leading was expensive after taking into 6 months interest.
Wacc was decreasing
NPV was +ve 1000
Discount was not feasibleThe exam was fair
Question 1 to find he market values was easy
Question 2 leading was cheaper
Question 3 Cost/Benefit was a little hard I could not remember how to do it, hope my steps earn me marks
Question 4 NPV positive, hard and soft capital rationing
Question 5 WACC reduced from 11.4 to 11. part b I spoke about modigliani and miller theory of dividend irrelevancyEarly settlement was beneficial.
Cost = 108000+ 35000 (admin cost)
Benefit = 648000 + 8000 (decrease in bad debt)I personally find this exam a bit hard. Q1,2,3 is the hardest for me.
MCQ is okay.
Section B
Q1a) I got 38.5% D/E ratio.
Q1b) Didn’t know what this question is about so i just simply calculated interest cover and D/E. Interest cover is 4 point something. D/E is 56%. Then commented financial risk increase so shareholders require higher return, and share price may decrease.Q2a) Chose lead payment as it’s my first time doing lead payment question. So i just simply did it. Didn’t know interest have to be included 🙁 But the money market hedge i calculated is more expensive than forward exchange if i remember correctly.
Q2b) Skipped.Q3a) Benefit > Cost by 373k. I got a revised receivables day of 35days. Saving in finance cost 24k. Cost of discount 108k but this is wrong I guess. Reduction in bad debts 12k.
Q3b) Forgot what i wrote but I know it’s wrong after checking the technical articles.Q4a) NPV is 1336k something. Incremental WC i put it in Year 0-3 with no recovery (wrong again).
Q4b) Hard and soft capital rationing.Q5a) Current WACC – 11.4% , Revised WACC – 11.1%.
Q5b) MM irrelevancy theory only because I couldn’t think much anymore.Let’s just hope we can pass this paper!
Can someone discuss like what they did for mcq I can’t remember the exact order of answer but I remember some details. Please someone help
@genty said:
There was an Mcq where equity beta of one company was 1.2 the target company’s beta was also given so did you take 1.2 while calculating Ke??Proxy company’s debt/debt+equity ratio was 0.25 so i assumed that debt is 25 and equity is 100 – 25 = 75.
you have to ungear the proxy company’s equity beta to get the asset beta so
2.0(75/75+25) = 1.5 (Tax is ignored on this question)
And regear it with the capital structure of the investing company (100% equity financed so no debt here) 1.5(100/100) = 1.5
and use CAPM to calculate the discount rate with equity beta of 1.5
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