*** F9 June 2012 Exam was … Comments and Instant Poll ***

what topics came guys?

?

A very fair exam

Question 1
Calculate NPV and Annual Equivalent cost, Discussions Sensitivity analysis and probability analysis

Question 2
Overtrading, difference and similarity between working capital financing and investment, Miller-orr model

Question 3
SME agency problems less than big company – reasons, mudaraba, purchasing power parity, forward hedge v money market hedge

Question 4
P/E valuation, Dividend valuation (tough – this year no dividend, how to use dividend valuation model), Calculate WACC, discussion on financial risk, business risk and systematic risk

Overall, time is slightly pressurised, but I manage to finish. No tough topics. Should be able to pass based on the impression I finish the questions.

I just did Q1 n 2 well. 3 was ok but 4 was disaster. Due to time pressure I went blank and cudnt find the share capital for wacc. Theory part was crap as well. Don’t know if I can get 50. Probably 25 marks has been absolutely messed up. Plz guys tell me ur experience if I can pass. Otherwise my life will b hell

Question 1:
Project 1 NPV 1614
Project 2 : Machine 1 EAC 89 (I guess) machine 2 105 ( I guess) Machine 1 should be purchased
Then Sensitivity/Probabality Analysis duscussion
Question2:
find if over trading with ratios to compare
Had to skip working capital financing/investment due to time pressure.
Miller orr model: Upper limit 275000 and return point 225000 what it good for that overtrader above.

Question 3: SME conflict with shareholder comparing with large one.
Mudaraba if it is OK for forward contract?
PPP calculate spot rate : 1.963 I guess. Discuss theory.
Forward vs money. which one to choose in question. (left it No time)

Question 4: PE valuation- I think I messed up- $3000/1.03*15=436893 (don’t if thats how it was supposed to be.)
Dividend valuation: Ke= 12% g=3%? and no dividend? just left it 😉
Calculate WACC: current 19% and after debt 14% (hope its OK did’t degear if needed Just could not see anymore 🙂 panicking )

Hope I pass will be glad with 50

anybody know how to do Q4?
Part (a) was asking for valuation using dividend growth model, the only thing i could think of was Share price valuation using Dividend growth model. The question did not indicate the number of shares and i made the assumption of 10 Million shares, in order for me to divide Dividends to fit in the Equation of P0=Do(1+g)/ke-g. Hope to get some feedbacks thanks!

que 1 and 2 gud que 3 was avg n que 4 was disaster.. didn ustnd wat to do due to time limit……….and dnt no……….pass or nt? 🙁

degeared may not be necessary since the business risk is still the same even if there’s an increase in debt. isn’t it?

ya, I just use the new equity beta to recalculate the cost of equity using CAPM. Hope this is correct. I am running out of time for question 4. Left 30 minutes for that question and somehow get stucked with the dividend valuation model.

the EAC QUESTION wat discount rate did u use? i took the 7% rate not sure if thats right anyone ????

I thought the exam was hard, I feel I may have gone backward (failed last time with 48%)
I’ve used the wrong NPV rate for starters and imagine it went down hill from there.

Islamic finance question – Wrong
Working Capital Finance/Investment – Wrong

That’s 14 marks gone there + the NPV rate mark.

Gutted………….Role on P1

Q1- pretty basic despite of failure in part E (damned)
Q2-Went well except the working capital similarities and differences carried 9 marks
Q3-Went well as well except the mudabarah whatever 5marks
Q4-No idea what is all about until I managed to figured out the way hopefully my WAY is the right WAY otherwise im lost in the middle of the HIGHWAY 25 marks right there

Well I think these questions are reasonable except for matters above (areas I failed to covered and lack in theory to explain basic elements in WC.Hopefully that will sqeeze me in the 50% and above candidates.I can no longer tolerate failures in this damn paper again.GOD BLESS everyone.