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can’t remember the question exaclty but the net present value once was false, expected values occur when over time, not on one off projects
@emo777 said:
So, you agree on reward scheme? Also, i think your mistake was when you forgot to multiple advance by 35/360 and then only multiply by 80 percent and by 2 percentWhy would you multiply the advance by 35/360 – the question specifically said the advance was based on the invoices raised – it’s just previous questions that have said based on receivables balance.
Jenny and guys, was the option that factoring increases the efficiency of receivables management right? I think so
In question 4B, I wrote on Traditional theory, M&M without tax and M&M with tax.
In question 2, I used the net benefit/net cost approach
Net Benefit: 1 Reduction in bad debt
2 Reduction in interest cost
3 Reduction in admin costNet cost: 1. Extra interest paid as a result of using factor for 35 days (2% * 35/360*80%*the credit sales
2. Factor charges.I arrived at a net cost of about 19K which means the using the factor was the wrong option.
You can check BPP for my method
@mfc2476 said:
just my way of seeing it clearly. you could do 1.415 * 1.02 / 1.018Oh well, knew I’d definitely got that one wrong anyway.
@emo777 said:
Ok, what about money deposits, kinks, beta of debt and net present value of project ONCE? Was it true?Money deposits – not a loan between bank
Kinks – yes it was the right option, though can’t remember what else was in that question
Beta of debt – not sure about this one
NPV, once only – I can’t remember the exact wording, but for some reason I thought it was true??@emo777 said:
Jenny and guys, was the option that factoring increases the efficiency of receivables management right? I think soCan’t remember the whole question – wish I hadn’t run out of time and could have looked again at the end. But, yes, factoring does improve efficiency of receivables.
@afuyegallas said:
In question 4B, I wrote on Traditional theory, M&M without tax and M&M with tax.In question 2, I used the net benefit/net cost approach
Net Benefit: 1 Reduction in bad debt
2 Reduction in interest cost
3 Reduction in admin costNet cost: 1. Extra interest paid as a result of using factor for 35 days (2% * 35/360*80%*the credit sales
2. Factor charges.I arrived at a net cost of about 19K which means the using the factor was the wrong option.
You can check BPP for my method
Same here for both.
I did the same as Jenny with the advance, and I think my total net cost was around £300k ish, so not viable option
Can anyone remember the MCQ about markets – there was an option at operating efficiency – think the other two options were true but didn’t know about that one – hadn’t come across it before so went for the answer that said other two only?
I said no, could have good performance but share option required even better performance?
@jenny3549 said:
I could well be wrong. Can’t remember the figures exactly but:Savings – on reduction of receivables x 5%
– on bad debts (revenue x 1% x 70%)
– on admin costsCosts – factor fee
– factor advance (on revenue x 80% x 2%)My costs totalled more than my savings.
so did mine , thanks for cheering me up actually i thought i was screwed real bad ;D
@emo777 said:
What about share options always value good performance?No, because if shares are falling generally good performance won’t be rewarded.
Just to notice, factor fee us calculated on full credit sales, not on advance
@jenny3549 said:
Same here for both.I hope we are right!
I found section A very hard and guessed alot of the answers.
Section B, there was no WACC which I thought would be there!.
Qu1 Currency – I put by using the forward rate they would receive more $
Qu NPV – I got 29 and inflated the sales year on year. Positive result
Qu Factoring company – Costs were the annual fee, then the factoring costs, I put 2% * ((7% – 5%, costs of interest for each company) 30/360 * sales invoices and it resulted in a small net benefit
Qu business valuation – unsureHow about the div payout/mean growth one – I said 6% mean growth.
Was there a question about payback or am I halucinating now (which is a distinct possibility!)
Also, seem to remember a question about M&M which I thought was tricky but can’t remember the details.
And, a question about Treasury Bills?
@emo777 said:
Does someone remember the value of 5% cost saving?Cannot for the life of me remember the exact figures but just tried to roughly work it out now and around 90 odd grand (big ish).
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