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my q1 to q3 same answer like yours
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The NPV was it think 4600 and while the WACC was 12.3 and the Teritical exprice 4.9
was not too bad of an exam. got a negative for the npv, and straightforward questions in terms of theory. but think messed up question 2.
fingers crossed
Slighty worried now, majority seem to have negative NPV, however, I got $0 NPV, which seems to tie in with one of the following questions!!!
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Exam was ok. Just not enough time to complete all questions.
Wow!! I messed up the fixed cost, still had a negative NPV but lost some marks. Q1b was proving messy to me because I understand that when NPV=0 that I should calculate IRR, just couldn’t wrap my hands around it properly.
I knew I had to do something about the overdraft but it wasn’t coming up and I couldn’t see what to do, I just put in the figures like that, funny enough the current ratio for 2015 was 1.4 times which I got so that made me comfortable.
I hope I get a 50% score that’s all I need! anything on top of it is a bonus.- Topics: 0
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Qn 1 I got positive npv $2233.
Maximum npv was around $3.5m.
we invested $10m. $5m went to project E which we had to invest in no matter the npv outcome because we needed the project for the business to remain competitive.
That left $5m to be invested in A B C D. For this we do PI and invest in projects with the highest PI.
Project D and B had highest PI and where mutually exclusive at the same time. So invest in these first and the rest in project C which has next best PI and was divisible. Maximum NPV is therefore around $3.5m. Can’t remember the exact figure.- Topics: 0
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I got a positive NPV of 64 using the investment of 5000 not 10000 as I believed thTs the whole pot of funds they have didn’t mean will use all for PRoject E I am not sure…..
Ranking was ok, market efficiency was ok… WACc was ok…. Not sure about the rest
Good luck to all of us, I believe it was tricky,lots of requirements and time constraint paper!
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My pv was $6.4m and positive npv of £1.4m against $5m capital investment.
WACC was 9.3%
I think my TERP was $4.51 something, including issue cost.
really feeling nervous as this was my second attempt. 🙁
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Wishing everyone all the best. Inshaa Allah we’ve all passed 🙂
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Same here. pheww
In question no 1 the $750 fixed costs were incremental meaning that the $750 should be compounded up each year by the compound fraction. An identical incremental fixed cost was included in the June 2013 NPV question which was also compounded up each year it is not just the change in the inflation amount year on year I don’t think.
June 2013 question/answer as follows: –
$250,000 Incremental Fixed Costs with inflation at 5% each year
Inflated outflows included in NPV calculation were: –
yr1 ($263) yr 2($276) yr 3 ($289) yr 4 ($304)
I did the above in yesterdays exam & got $0 NPV for the answer???
@dekerg – I think that your method is correct
Hi – how big was your negative balance – mine was negative but not by much? i did not bother with the answer condisering the fact the project would go ahead anyway due to its strategic imprortance and that’s what i put in my answer as well!!
I got -tve Npv of $46 as well
What about the capital rationing ques- part b? Did you include project e?on the table the total market value for the equity share for 2014 was given i think about $55m or $58m and the number of the shares in unit was 12000 was given when u divide u u have ur po which was around $55.m/ 12M shares = Mkt price per share of $4.58
so right issue will then be $4.58 x (1- 0.2) =about $3. something i cant remember that was the procedure which i think was right
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Its not negative… if you get negative mean you have included fixed cost. In question fixed costs is incremental which includes inflation and charge in full for 1st year and incremental fixed cost in second year. So you wont get negative npv. Its positive npv of 1500k…… if you get negative it does not make sense for capital rationing question for project E
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Its not negative… if you get negative mean you have included fixed cost. In question fixed costs is incremental which includes inflation and charge in full for 1st year and incremental fixed cost in second year. So you wont get negative npv. Its positive npv of 1500k…… if you get negative it does not make sense for capital rationing question for project E
Therru. If you look at the past papers, the last time incremental fixed costs came up it was not how you suggest, but the full fixed cost amount plus inflation every year.
The second part of the question said to treat NPV of E as zero so it would have made sense regardless of a positive or negative NPV.
I would agree with Daniel. To me, incremental fixed costs is just telling you that they are incurred as part of the new project so should be included in the calculation, as opposed to being existing fixed costs which wouldn’t be included (as stated above, past exam papers support this). I also got a negative NPV which is what I expected to get as the question hinted that it would be negative by saying that it was strategically worthwhile and to later assume the value was zero. If the NPV was supposed to be positive, we’d have included it in the final overall NPV value later in the question.
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A good question paper, i gave my 100% to prepare, i think i did well this time in F9. And the timing was absolutely perfect, though i am bit slow in writing!!!
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