*** F9 June 2011 Exam was … Post your comments here and vote in Instant Poll ***

There was only 1 rate given but as someone just said apparently we were told to calculate in nominal terms so 🙂 🙂 🙂 can’t believe I missed that, hopefully not toooo many marks lost..

oh my!!!!!!!!!!!!!

any doubts ,i would love to answer ,if i can

in Q1 do we need to add inflation? i mean in 3rd year it was written that variable cost is 3, then we need to add inflation 3 time (because it was 3rd year) is that OK?

what was the 1 way to incorporate risk in investment appraisal?

in question 2 we need to take 95 in year 0 and 100 in 10th year?? is that ok? or 100 in first year and 105 in 10th year?

@handsome said:
in Q1 do we need to add inflation? i mean in 3rd year it was written that variable cost is 3, then we need to add inflation 3 time (because it was 3rd year) is that OK?

what was the 1 way to incorporate risk in investment appraisal?

in question 2 we need to take 95 in year 0 and 100 in 10th year?? is that ok? or 100 in first year and 105 in 10th year?

I hVE EXACTLY THE SAME QUESTION!

@05008967 said:
I left the cost of capital as it was in Q1 because all other costs were on the same inflation rate – can someone please confirm that this was the correct thing to do? I ended up with year 5 tax at 615k.

Q2 for the WACC I ended up with 12.6% before the bonds and then 10% after bond issue. My cost of debt for the bonds was 5% Really worried I have done something way wrong on this question.

Q3 was quite hard too. I am usually good on ration analysis but having the info split all over the place and only part of the SOFP threw me out.

Q4 – panic about the interest rate question:( Then did my money market hedge but ended up getting the forward contract being more value for money…. i think that sounds a bit wrong!! Saved about £3750?

Q4 part B – I felt led into using the EOQ but it didn’t seem to ask for that, so ended up calculating the current order cost, the current holding cost and the purchase price x annual demand and totalled up.

I hope for 50 🙁

Q2 I got IRR 6,02%, WACC 12 and then 11 or so I think
Q3 Worst question by far
Q4 forward was better by around 4000, yes
part B wasnt about EOQ and choice with 3,6% discount was better with option 0,5% discount being worse even than current

@05008967 said:
To incorporate risk in investment appraisal I suggested using another cost of capital and then using the IRR to determine if it met with current objectives. I also suggested using sensitivity analysis but think that is the wrong thing to write about too.

@05008967 said:
To incorporate risk in investment appraisal I suggested using another cost of capital and then using the IRR to determine if it met with current objectives. I also suggested using sensitivity analysis but think that is the wrong thing to write about too.

using another cost of capital is right ,but not based on irr,.should talk about adjust wacc according to risk. sensitivity is right i think

@tzxsean said:
i duno correct or not

but i said increase inflation rate estimation, shorten product life cycle years estimation and decrease estimation on customer demand and sales volume

@tzxsean said:

all your answers i think is about the robutness of a project ,it refer to sensitivity of a project ,another two ways need to consider.
i duno correct or not

but i said increase inflation rate estimation, shorten product life cycle years estimation and decrease estimation on customer demand and sales volume

very lengthy paper hope for 50%

Hope for at least some marks for theories
Sometimes in exam we cant recall everything we learn
Eg. Sensitivity analysis

future better than money market rate

Is the fixed cost increment an incremental cost?

I work to nearest 1000 after every steps instead 1 final figure