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Mutually exclusive meant to me you had to choose either. I went for highest Pi index and excluded 2nd best. I ran with remainder and had saving of initial investment. Negative npv
2nd question using ratios nice but time consuming resulted in higher overdraft and payables to be funded. Aggressive policy in place.
Q3 was nice. Wacc was grand. Degear and regear was con. Cant remember partc but share hypothes wasnt bad.
Q4. Asked eps div and share wealth said 1st two no and last 1st yr yes and last yr no due to static div policy. Terp lovely question included costs cos had to be raised. Last part sources made poor attempt cos of time@kutiez2005:
But did you take Project E into consideration, therefore limiting the remaining funds to $5m before choosing between the others?It stated maximum NPV, so I did A, B and C, but I wrote a comment on why I was taking B over D.
I’ve just remembered that I left out efficient market hypothesis to go back to but didn’t, can anyone remember how many marks that was? I have a feeling it was quite a few!
@Byron – yes I did 🙂
So all of projects E, D and C and $500 of $2500 investment in A (ie 20% of A)
I have to say for non english first language speakers mutually exclusive is very unfair. Me and colleague had different interpretation and we speak english as first language though perhaps not well.
Learn Islamic finance terms parrot fashion they said. They will definitely be examined every sitting they said………….
For Q4(a), the one with the three objectives, I got:
– Objective 1: not achieved in both 2013 and 2014, but moving towards target, perhaps will be helped by expansion
– Objective 2: achieved in 2014 only
– Objective 3: total shareholder return exceeded target of 5% in both years, but the target was rot in line with the cost of equity which was 12%Didn’t manage to write a lot like the examiner’s answers though as I was heavily pressed for time.
@tallaghthoop – because they have to invest in that one so although the NPV is zero it still uses up $5m of the available $10m funds
If you ignored it but then only used $5m to capital ration then you would’ve got the same total NPV 🙂
Oh no!
just realised i put external hedging techniques instead of internal!
can anyone remember how many marks that was for?
@kutiez2005:
Great! Thank you so much….although I think we will have been expected to consider the other combination as well to gain full marks.q5? there was a Q5 as well? 😛 just kidding Objective 1 wasnt achieved, Objective 2 was achieved in 2014 and Objective 3 was easily achieved in both years!!
@Kuzco: 3 internal methods x 2 marks = 6
I suggested:
– opening a foreign bank account
– creating costs in foreign currency, like opening up a factory in the foreign country
– invoicing in the domestic currency
– leading receipts and lagging paymentsHope I got all of them right.
Its last on list in anycase that part of question has five marks three of which is Pi index and ranking thats the key part to question. Sure part c has 6marks for rationing discussion?
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I hope f9 has no variant like other papers
@Ahmed: Haha! Sorry my bad, it was a typo…God forbid we had 5 questions 😛
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….
@ismaeelt:
We were also required to discuss the change in working capital financing policy. In the first period, I got 51% of current assets financed by current liabilities and this had increased to 76% in the second period, which shows a move from a conservative to an aggressive working capital financing policy.How did you calculate the od from 2014 to 2015?
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