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

Did any of you guys discounted the cost of the machine in year 1 and not year 0 as it was mentioned in the question that the machine is going to be paid on the first year of its life.

I found that part tricky. The rest was easy…

What was the Equivalent Annual cost for 5 years asset? 5th year NPV was 777140. MCQ F9

I did same

Anybody used in NPV question real WACC, not nominal? I used and didn’t add any inflation. Since the inflation is general it must gives the same result as using nominal rate with inflation, but it much more faster in calculations.

The paper wasn’t bad at all. MCQ where not that bad at all.

Managed to get through q1-q4 pretty ok. But then realised I was running out of time for q5.

I then firstly answered part b of the question and talked about the irrelevant theory. Then with 10mins left tried to do the wacc but my mind stopped working cz I was panicking.

Managed to only calculated the cost of debt of the original loan note using irr.

By the time everything started coming back to me time was out. So I did not calculate cost of equity which was easy marks or the the market values or the actual wacc, so I’m so disappointed tht I didn’t finish a question I know perfectly well how to do.

In my head I’m like surely they won’t let someone pass who didn’t even do the wacc ahhhhh

This is depressing

@chris1975z said:

Thank you @chris1975z for the positivity. Goodluck to you too!

when will result be known?
and may I register (if I fail ) for march session ?

I thought it was a fair enough exam also. I did not have a lot of time to study on this one. Maybe 6 weeks with an F5 repeat. F5 took probably 60% of my attention. I am also due to start P1, but I am going to keep going over F5 and 9, particularly f9. I kind of froze in the exam and made some silly mistakes. It wasn’t a lock of knowledge, just a total brain freeze. But to be fair, the exam itself was straight up and fair. If I pass F5 I will be happy and take F9 in March with correct preperation. Who knows though, I may be over the line.

i dint remember mcqs

Q1a. Gearing calculation. 4 marks. This one took me particularly long to work out, somehow I got a bit confused. I believe is was 38.5% D:E.
Q1b. Discussion on previous question. 6 marks. I calculated interest cover would have gone down (4.6 times if I remember correctly), and gearing would have gone up to about 58% I think. Spoke about how they should consider using equity finance and that the competitors are probably using more short term debt as their interest cover is high comparison to their level of debt.

Q2a. Forex. 5 marks. Hedging most expensive, forward 2nd most, and leading (500,000 pesos x spot rate) cheapest.
Q2b. Pros and cons of futures. 5 marks. I basically said they’re forwards which can be traded and discussed the pros and cons.

Q3a. Receivables management. 6 marks. Really kicking myself on this one for forgetting to include the increase in profit, so I got a negative figure.
Q3b. Foreign receivables management discussion. 4 marks. I mentioned that the main risk is bad debts, and ways of countering was export factoring and export insurance and some discussion on those. Didn’t mention transaction risk though, didn’t seem relevant.

Q4a. NPV. 10 marks. I forgot to inflate the working capital. I inflated selling price, variable and fixed cost. Some are saying FC shouldn’t be inflated but I’m quite sure every past question inflated FC. Discounted using 11%, came to something like 1122 positive I believe. I’m also not entirely sure what the examiner meant by calculate in nominal terms, never came across an NPV question worded that way.
Q4b. Capital rationing. 5 marks. I discussed hard cap, i.e. economy wide and company specific; and soft cap, internally imposed such as budgets etc.

Q5a. WACC. 10 marks. Also kicking myself for this one. I forgot to calculate the WACC before. I think it came to around 11%. Interest on bank loan had to be tax adjusted, the loan notes had to have their IRR found, the new loan notes (bond?) had the cost of debt and market value already given. And of course equity, the number of shares was 12m/0.50 x 3.45 I think, definitely excluding reserves cause its market value.
Q5b. Dividend policy. 5 marks. I think I messed this one up as I spoke about the dividend valuation model and the limitations of the figures involved in it. I didn’t even mention M&M, but I think I put something in regarding the signalling effect. From what everyone else said, I think I went off point.

As for MCQs, I know I got a lot of As in the beginning and q15 and q20 both had me stuck for some time. In fact, I couldn’t arrive to any of the answers for no. 15 and 20, they drove me mad. The MCQs seemed OK, but I had a habit of feeling like I did OK in them and messing up big time. Quite concerned about this one.

Same here! 🙂 Hope we are correct.

I have found WACC 11.65% and 11.25% after taking the new loan. Reduction 0.40%. Found MCQ answer mostly in A&D(70%) 20% in B and 10% in C. Worried with my MCQ. what u found ………………….