*** F9 June 2013 Exam was.. Post your comments ***

<cite> @icedawn said:</cite>
no it said to calculate wacc based on market values !! if it said book values then yes reserves should be taken

OMG I went BACK to change it – I crossed my answer out calculated the WHOLE THING again… :'(
I feel so stupid :O 😐

btw for the bank , were we supposed to use the after tax interest or just the 4 %?

Did anyone NOT inflate due to that was asked only the NOMINAL and the real?

<cite>@leogr said:</cite>
Q1. remember any the amountof NPV;
Q3 whatis the preferred hedging method;

for me NPV was 4 million+
and forward market hedge is more preferable

I got negative npv at 5% so it must have been lower. According to my limited calcs

Bank inerest is tax deductible I believe

Hi guys,
In the WACC calc….working out the cost of the redeemable loan note ……in the irr calc for df@5%and 10% for both Npv I got was negative…did anyone get this or maybe I went wrong with the calculator….????.?

Id say you only get 1 mark for introducing tax to bank debt. So thats all youd have lost. Chin up.

And that’s if im right of course. And many many people tell me I never am.

No point in panicking now. Let’s wait for the proper answers. Then we can all panik 🙂

John Moffat,

Thanks alot for the lectures. I was able to apply most of the principles which I learned from you.
Will wait for the results.

Kudos to you

What rate did you use to discount the Y3 share price to the current price value?

First two years dividends were suspended, so I applied the dividend growth model for Y3, got the share price in Y3 and discounted it to it’s current price value. I used the 3% rate which was the current dividend growth, I could have used the cost of equity, I am not sure.
How did you do that?

<cite> @nevyana said:</cite>
I got exactly the same, forward is more favourable to market one.

When are the solutions usually published do you know?

my take on this exam

Q1

a) NPV , i cant remember the figures , all i know is a positive one , overall should not be a problem , maybe some clumsy steps here and there
b ) real v nominal , dont really know how i answer it , but maybe i remember the answer from reading BPP study text , should get few marks
c ) financial objectives , this one i just put the company objective aim is to increase profitability and reduce cost , and they want us to link it to the purchasing of the machine , i just wrote what i can wrote , thats all , still can get marks , but no much

Q2

a) WACC , for this i get around 11.8 % , i did not include the preference share ( u shud not ! ) but i did not include bank loan ( if this is really need , arghhh ) . since to find ke on redeemable debt need to use IRR to solve , i just use 10 % and 12 % , bcoz my lecturer said b4 , honestly u dont have the time to find the rite DF , so stick to it , i just follow his advice , so now not sure on that . but overall , do WACC should be ok , may drop 1-2 points , but still ok overall
b) use of CAPM in projects , seriously i dont know anything on this , serious , i just waffle through , but if they give me even 1 mark , i be ok with it
c) why ke is expensive than kd ? that Q i think is not really a problem . tax advantage , equity holders last in line to receive anything in event of liquidation , debtholders confirm get some interest pay while equity holders are uncertain and thus require higher yield . i guess ( and hope ) with the answers that i give can give max points or 1 mark drop will do .

Q3

a) working capital policy . at 1st i have no idea wat this Q is on about but i just do some ratio calculations and from there , i discover the word POLICY might ask us to write about aggressive and conservative method ( ? ) . so i just wrote that the company is shifting policy from conservative method to a aggrssive method . and that all what i wrote , thats all . maybe might earn some marks
b)receivables policy . i just wrote about offer credit got a cost , and how a company need to balance profitabilty and liquidity and also the credit control policy about it . not sure whether i am correct or not , but maybe some marks is there , if full , thats good !
c) forex risk . the risk involve are transaction risk , translation risk and economic risk . full marks expected
d) forward and money market hedge . no sweat , full marks once again expected

Q4

( a ) – ( c ) i do not have anything to comment about this partly due to time constraint , so i have no choice but to waffle here and there by just calculate what the Q asked me to do , but hopefully out of 16 marks , 3 will be sufficient for me
d ) Factors to be considered in placing , venture capital and trade bonds . I think this is a saving grace for otherwise a disaster part of this Q which can potentially pull down a lot marks and may make it fail . full marks expected

Overall : I think this paper is a fair paper to deal with , and except Q4 ( a) to ( c ) and Q2 ( b ) , i think and i believe i can go thru with a pass . after countless of times of dealing this paper , this is the 1st time i complete all the Q , with no left empty part on it . But anything can happen , so I just keep by fingers crossed !

Bear

<cite> @nevyana said:</cite>
On the ACCA website but they will not be published soon. They will upload the questions sooner and the solutions are published close to the results announcement.

Thanks dude for that and the 6m info, thought t was 5 marks, worse then i feared so!