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

Hello cazza, u are right that we got WACC increase of diff. Of 0.3%.I think it's bcoz the structure was given in %. I used d figures as given. May be u assumed mkt value 4 both structures...well, may be d examiner is only interest in d behaviour of WACC( i.e the changes that occurred) and not the figures.

y acca is not putting the question online.......got previous 1's really fast.

Ben. i got 5.2% and 5.52% for Q4, so maybe we are not far off

for q4 dvm calculation, is there anyone calculate like that: use year 3's earning to calculate the price, then discount it to give current share price? I saw part b of 2010 June's Q4 is somehow a similar question.

Jaysuey, u damn right. I used Premium in place of Market risk, that's y my figure is lower, but we made d same point(conclusion) though. That was an oversight or lack of concentration due to time pressure. I probably will loose few marks there. But over all, the buck of the marks will lie on the explanation. I hope examiner understands my point.

No one has said anything on q1. The NPV. How did u guyz inflate the sales and VC ? I inflated base on the first year sales/ vc. And FC was ignored, as the examiner already told us that the cost has already been incurred. I hope I did the right thing. Never seen such kind of que. In my life.

oooh...the question is uplozded

well the paper was not bad though i might not get a pass.

@mbangweta said:
well the paper was not bad though i might not get a pass.

dont be so disappointed

do you people know when the answers will be published ???????????????????????????????????????????????????????????????????????????????????

hope will get around 65.. lets see..

hey guys, any one clarify was it murabaha, trade credit, or mudaraba equity finance in the exam for 5marcs? i took it as murabaha trade credit ....??

It was Mudaraba, the partnership thing.

@benjamincozoemena

On your point about fixed costs - should we not have included them as I thought the question stated incremental?
Did anybody else include fixed costs like me!!? :(

@nenor said:
It was Mudaraba, the partnership thing.

Is that the one where one party provides the money and the other only the expertise?

@sarzie87 said:
@benjamincozoemena

On your point about fixed costs - should we not have included them as I thought the question stated incremental?
Did anybody else include fixed costs like me!!? :(

I included fixed costs in the NPV question (1) as they were all due to the project being considered and therefore relevant.

I believe that is correct. If it had been absorbed overhead then it would have been ignored (unless it was incremental etc)

Have we decided whether it was correct to use the 12% discount rate or 7% yet?

Both were nominal (not real), but the former was pre tax and the latter after tax if I remember correctly?

@curiousmeerkat said:
Is that the one where one party provides the money and the other only the expertise?

yes

@curiousmeerkat said:
Is that the one where one party provides the money and the other only the expertise?

yes, mudaraba is a form of islamic equity finance. The party who contributes the capital is known as rab-al-mal while the party managing the business is known as mudarib. Profit is shared according to agreed proportions while loss is solely borne by the capital provider.

i think the 12% was used to discount for the Two machines,(equialent annual cost) and the 7% for the calculation of NPV.

Of course. The cash flows in the NPV calculation in a) were all after-tax (or at least you were supposed to make it this way - you had to deduct tax and add capital tax allowance). So when you discount after tax cash flows you are obviously supposed to use the after tax discount rate of 7%.
The discount rate of 12% was only used for part b) of the question, as it explicitly said to ignore tax effects.

The paper has covered ALL topics and thus it is time constraint. This makes it difficult even to score a pass, without through knowledge of the subject. Question 2 & 4 was my best; theory over flow the papaer- 60%; if anyone fails to express themself, advicing management then you fail the paper. The examiner need to revise the paper - it is extremly difficult. Too much work to be done in that time. I hope god bless me with a pass - anything 50 and above!!!!!

@nenor said:
Of course. The cash flows in the NPV calculation in a) were all after-tax (or at least you were supposed to make it this way - you had to deduct tax and add capital tax allowance). So when you discount after tax cash flows you are obviously supposed to use the after tax discount rate of 7%.
The discount rate of 12% was only used for part b) of the question, as it explicitly said to ignore tax effects.

Excellent. That is what I did. It confused me at first but that is the logic I eventually went with.

I think its unfair about how they word the questions. Question 4 was a nightmare.. you are expected to work out the P/E which is Share price / Earnings per share.. Yet they didnt give you the number of shares... I think everyone should write to the ACCA ( i have ) and say how unfair this exam was. They probably want us all to fail so we have to pay £80 resit fee. Remember ACCA is a business and need to make money. Maybe they should have given us a question of how Businesses con thier customers... i would use ACCA as my example and definately get 25 marks !!
Please can everyone email ACCA
Hopefully they would take our frustration on board and lower the pass mark slightly

to cardine
how did you work out q4 ? the P/E calculation ?

Thanks

ACCA: "JUNE 2012 EXAM RESULTS We will release the June 2012 exam results electronically by email, SMS and make available to view online from 8 August 2012. Paper results will follow one week later from 15 August 2012 for those students who have requested to receive paper copies."


Also, questions are already published: https://www.accaglobal.com/content/dam/acca/global/PDF-students/acca/f9/exampapers/F9_2012_jun_q.pdf

@kamsingh01 said:
to cardine
how did you work out q4 ? the P/E calculation ?

Thanks

@kamsingh01 said:
to cardine
how did you work out q4 ? the P/E calculation ?

Thanks

PE ratio is MV/Earnings: You are presented with the variables - sector average and earnings therefore, you MUST have 3000x5 = $15,000. Discuss earnings is what is available to equity for cash payments - dividends and sector average is the expected future growth of that earnings.
Cost of equity is 12%, hence value is $5.722mil (risk-free rate 4+(1.6x5)
WACC is 10% and 10.32%. You MUST used the after-tax cost of debt; therefore, 1 - tax rate 20% x 5 and 6 respectively. Discussion the change in capital structure require a higher compansation for equity owners because of the financial risk they face -no dividend and the inability of the company to pay interest cost. WACC will be constant over a period, but change with gearing.

@kamsingh01 said:
I think its unfair about how they word the questions. Question 4 was a nightmare.. you are expected to work out the P/E which is Share price / Earnings per share.. Yet they didnt give you the number of shares... I think everyone should write to the ACCA ( i have ) and say how unfair this exam was. They probably want us all to fail so we have to pay £80 resit fee. Remember ACCA is a business and need to make money. Maybe they should have given us a question of how Businesses con thier customers... i would use ACCA as my example and definately get 25 marks !!
Please can everyone email ACCA
Hopefully they would take our frustration on board and lower the pass mark slightly

hi, i don't think ACCA will lower the pass mark anyway. They will just publish the passing rate based on the raw marks without doing adjustments. Indeed, question 4 is very unclear :(

The exam was fair enough.
The requirements of some parts, particularly question 4, was a bit sketchy while feeling the effects of time pressure.

Hi kamsingh, I posted my thoughts on Q4 and feel the same, Q4 was so different to previous past papers it was totally unfair! Like you say it is a business so I guess they need the money!! What annoys me is the world is tough, us students try, not not only work full time but study, these examiners have their qualification would it be so difficult for them to make the paper somewhat slightly easier to pass?!

@kamsingh01 said:
I think its unfair about how they word the questions. Question 4 was a nightmare.. you are expected to work out the P/E which is Share price / Earnings per share.. Yet they didnt give you the number of shares... I think everyone should write to the ACCA ( i have ) and say how unfair this exam was. They probably want us all to fail so we have to pay £80 resit fee. Remember ACCA is a business and need to make money. Maybe they should have given us a question of how Businesses con thier customers... i would use ACCA as my example and definately get 25 marks !!
Please can everyone email ACCA
Hopefully they would take our frustration on board and lower the pass mark slightly