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Q1. A. Calculate the market value debt/equity ratio and comment on findings.
Industry average Debt/Equity ratio is 40%.
Q1. B. Evaluate and discuss how share price would be affected on publishing news that company will raise new finance through issue of 8% loan notes. Assume semi – strong efficient market.Q2. A. Compare a money market hedge and forward market hedge on payment of 500,000 pesos in 6 months.
spot rate 1.402
6 month forward rate 1.417
short term peso deposit rate 0.5%
Short term borrowing rate us$ 1.5%
Q.2.B. Discuss the advantages and disadvantages of hedging exchange rate using currency futures?Q.3. A. Early settlement discount of 0.5% is given evaluate if financially acceptable?
Income $30m
Credit sales 80%
75% customers take up discount.
Current receivables collection period is 51days
Bad debts 0.5% of receivables
Discount policy increases admin cost of $30000
Bad debt reduction to 0.375%
Short term cost of finance 4%
Q.3.B Discuss two ways of managing foreign accounts recievableQ.4. A. Calculate the NPV in nominal terms and comment on the financial acceptability?
Scenario
Investment in New machine $1.5m
4 year life
Inflation 4.7%
Sales price $5.6 per unit
Variable cost $3.2 per unit
Fixed cost of annual maintenace $145000
All costs and selling price affected by inflation.
working capital of $150000 required in the beginning of first year
Capital allowances at 25%
Tax @ 27%
Residual value $200000.Q.4.B. Comment why there is limitation on investment finance raised despite the company having a fairly investment outlook.
Q.5. A. Calculate the Market value WACC for the below.
Ordinary shares of $0.5 $32
Ex div share price $3.42
5% loan notes 12m
MV $92.12Bank loan 10m
before tax interest 7.4%7% loan notes $15m
cost of debt 5.1%
Tax 27%Q.5.B. Discuss critically that the share price of above company will not be dependant on changes in dividend policy
Looking at these now I made so many mistakes . I think I had a good section A. Section B I made a mess of the wc question. I hit the entire benefit with the cost of borrowing, not just the receivable movement . Will be a tight pass on this one. I also forgot the IRR on the redeemable note on the wacc. I froze in the exam for some reason.
@Shariq,
As far as I know, ACCA haven’t published the September 2015 paper and the December 2015 one isn’t on their website at the moment.Results come out w/c 18th Jan 2016.
I read on the PQ magazine that the ACCA wont be publishing full papers going forward, which is unfair and I’m not the first (nor the last student) to have a moan about this decision.
it just doesnt make sense why they would not publish the question papers as well as the answers
@just_bilal said:
it just doesnt make sense why they would not publish the question papers as well as the answersIt is very shady on their part.I found some section B’s were asked differently etc. I think it also lacks transparency and is of no help to students. A crucial element of preparation is gone.
In the absence of examiner answers how may we decide whether we are following the correct approach in our answers solving past papers.
As the ACCA has kept making clear, they are not publishing past exam papers in full, but are publishing a hybrid paper with a mix of questions from the previous two exams.
The question paper for September/December 2015 is already on the ACCA website and they will publish the answers in the next few weeks.
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