*** F9 December 2015 Exam was.. Instant Poll and comments ***

@dreamscars said:
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

I thought they had given the target beta as 1.2 :/

Not in correct order. My answer in bracket.

1. Project specific cost of discount. (11%)
2. Equivalent annual costs for replacement. (20120 something like this. Remember it was C, or the third project.)
3. Transaction risk for a company with subsidiaries ( 1,2,3 )
4. Reverse yield gap ( Chose A, but should be C )
5. Perfect capital market in MM theory
6. Total shareholder return ( $9.76 )
7. Discount money market instrument
8. Traditional view about WACC I think. ( 1,4 )
9. Future spot rate using purchase power parity
10. What’s most relevant to someone selling a company. ( NRV )

That’s all I can recall. There are some questions asking to choose the correct one.

Do you mind adding in what you remember? 🙂

@alexanderrobert1989 said:
How did people calculate the Debt to Equity in MV terms in the first question along with profit?

If reserves were included it massively reduced the any levels of gearing?

In terms of profit, you have the interest gearing which is profit before Interest and Tax over interest paid. So you can workout the profit levels.

For part b, i wrote that the interest gearing level was low, loan note was high-interest, even though d/e ratio was low compared to the market, it was a lower-quality loan note given that there is a risk that the interest will not be payable.

@farhantahir786 said:
I didn’t add reserves as the market value of shares should already have it in consideration. But unsure lol.

Only ordinary shares are included when using MV.
If using BV, reserves will be added too.

@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.

Of course it does!!! It means the remaining 25% of customers remain at 51 days and the 75% take up the 30 days!!!

Hi does anyone know when ACCA will release results? Or if open tuition will be doing there own answers?

TIA

@chris1975z said:
18th Jan. Details are on ACCA website along with policy of publishing only part of previous papers and no MCQ,s. OT can’t answer what they can’t get hold of.

Hey did you get 40% gearing? i didnt include reserves

@sams1987 said:
Sorry ment ACCA release their answers! They said they admit releasing MCQ back in the new year and they have!

Wont be releasing MCQ’s questions so definitely no answers … but for section B I guess they will release answers near result day.. questions are already released in hybrid foam (which i hate though)

Fab thank you! What does hybrid mean? Where do I find them?

TIA

The exam was fairly ok. q1 was tricky.multiple choice questions where a bit tricky because of the time pressure i wasnt able to read thoroughly

what did you guys choose for these mcqs
calculating project specific cost of capital
EAC
money market instruments
using purchasing power parity to calculate future spot rate
calculating shareholders return
calculating the working capital of a business
financial objectives of a company
macro economic targets
translation risks
valuing a company for selling

Guys the leading was correct but you all forgot to multiple by the interest rate as it specifically mentioned in the question that it would borrow the money, thus making forward as the cheapest hedging method

@6shahir said:
Found this paper quite hard…. Mvs oh gosh……….. 🙁 MCQs pls save me and the last two questions….

The exam was a good paper. The question with the dividend policy was exactly as the one on the specimen exam. If anybody did that paper they would gain easy marks by jus rewriting what Mr moffat said and/ or write as the moddle answer.

For the MCQ on working capital of company – should the cash & cash equivalents & the short term borrowings have been included?

If you only included trade receivable & inventory – payables you got answer= 20

If you included T/R & inventory & cash equivalents – payables – short term borrowings you got answer =16.