FM*** F9 June 2014 Exam was.. Instant Poll and comments ***

I hope f9 has no variant like other papers

Thanks

The capital rationing 1B was only 5 marks. Every single comment is about that :O My NPV was -71. It was obviously going to be negative, it gave a huge hint in the question and in the requirements. Question 2C, analyse liability and asset position. What a stupid question to ask for 8 marks. The only change was going to be in year too when the COS decreased to 60%. Regearing was around 1.08 something. Overall quite good. Hope to pass!

I thought that aswell. Since they put so much emphasis on the November being zero and it being a money maker for the company. What did you guys do for the machine disposal? The capital allowance threw me on that one, did we have to work backward and calculate the original cost of the machinery? The question only mentioned that the initial cost of investment 5m was allowable for cap allowances. So I just put the disposal amount in. I got a positive NPv of like 2m....

@byron How did you calculate the od from 2014 to 2015?

Examiners are fcuks. When 8 marks goes for something that suggests these people want more. Hence waffling introduced. Anyway my understandin g of q1 was investment was limited to 500 and when project e is non positive we concentrate on other projects.

OD was calculated using the target current ratio of 1.4

@neelythere.... I got the same TERP as you so I hope it's correct :-)

I also got negative NPV 45 so hopefully we will be right. For the TERP I got 4.5 ignoring the issue cost as well.

For the 8 mark Q I first calculated the %age increase/decrease in inventory, receivables, payables & overdraft. Compared to a static sales & %age reduction in COS. Then I calculated the %age that WC investment using short term finance had changed & that's when I finally understood what the Q was asking ie changing to a more risky aggressive approach so I think my first half of the answer may have been rubbish although it was another one of the ones that I couldn't go back to for being ill grrrr Completely left out the efficient market hypothesis too (weak, semi strong, strong), knew the answer but left it until last & couldn't fit it in. Anyone know how many marks that was for?

I got the same answer ;)

Question 1 - I got a positive NPV of $76,000 (close to that). I am so shocked people are getting negative figure. I can't sleep cos I felt confident calculating that NPV. The capital rationing, Project E should be ignored. You cannot ratio without NPV, the NPV gives you a clue and if you had use profitability index you are wrong. I got close to $3900 (best option A+B+C then since I believe I failed the NPV, I think adding E to that equation will be better because B and D and mutually exclusive). Question 2 - Cost of Capital - The ungearing and regearing was sort of fun. I cannot remember my answer though. Question 4 - Sources of finance and characteristics of long term debt finance (Availability, Level of Finance Risk, Security & Covenant, Cost of Issue) Source of Long term debt finance (Debenture, Bond, Long term borrowings) Question 3 - Seeing comments here, makes me assume I failed the TERP. I hope I pass enough. This NPV may haunt me till results are out

6 - 8 marks

@justkency - you would usually ignore a project with an NPV negative or zero but in this case we were told that the company were going to invest in project E regardless of whether or not it was financially acceptable so we did have to take that into account with the capital rationing.

Can anyone remember how many marks were available for the systematic & unsystematic risk question with regards to portfolio theory and CAPM?

Oh dear, 8 marks is a lot to miss out! I feel like I've done enough to pass with what I did answer though but I don't think I will be passing with a very high mark. My lowest so far I think. Need it to be over 54% to keep my average up for the Oxford Brookes BSc so fingers crossed.

Ive just realised i mixed up systematic and unsystamatic risk. I gave the correct definitions just got them mixed up. Do you think i will lose all marks for that part?

What s the answer for 1 question ...c ....I mean that theory question

Q1 C we had to write factors for capital rationing like Recession, fear of high interest payments and dont remember what i wrote the 3rd one :P

For the adjusted cost of capital in the wacc question what beta did you all calculate?

I think I passed. I did all the question. I don't remember my answers though. but the main thing that puzzle me in the exam was the mutually exclusive projects in #1 but that's not worth much points, so I think I am good.

My ppr went kinda good..negative NPV (dun remember the figure) buh it scared the crap outta me the first time, I did the theory parts relatively fine too buh m super worried cxz of my handwriting (it was exceptionally bad today) .. Hoping for a pass in 60s :) TERP ratio was kinda tricky too! Buh I did get it somehow..any ways best of luck ya' all :) Can't wait for 8th August .. I hate uncertainty lol

For Q1 do you include a tax saving as a result of the scrap amount? I did this, wonder if thats why my npv was positive. Q2 I didn't like that it mentioned figures for the quarter, I ended up dividing my cash operating cycle by 4 but then changed my mind when I saw the figures to compare with the next year. Wasnt sure about the bit whether it could be positive or negative, I said it would normally be positive unless business has some kind of deferred payment scheme with suppliers like the murabaha thing. For the question on growth targets I got that they failed to meet them all, used the geometric growth over the 2 years for first two and the last two I took the total shareholder return to mean gain in divs and profit after tax divided by profit + divs from last year. Lost alot of marks hope my discussion answers carry me through. Goodluck all!

Any one like to match Q1. a) NPV (292565), B) Rank D, B, C, A,E . Q2) Working invest. cycle 110 days, overdraft 5--------, acid Test, .59 or 49. q3) A) Ke- 10.31% IRR-4.42%, WACC- 9.32%, B) Ba- 1.02 and Be- 1.19 Q4) P0- 4.91, g= 3.0----% After Discount 20% -price 3.76, TERP- 4.52

8 Marks

I got same answer as you was so worried that it wrong based on previous posts

I also said that cash operating cycle can be both positive and negative. And I gave an example of service industry (no inventory, little customers and more payables)

Frm my analysis the company didn't meet their set objectives. Q4a

Does anyone know exactly what was expected inQ1b? I was totally swept off myfeet.

It was my 2nd attempt at f9 today and what I have learned from both exams is that you need to know the theory. You cannot rely to pass on numbers only as with all the formulas twists and turns plus time pressure it is highly unlikely that the final calculations will be correct. Good luck everyone.