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Yes, Jenny. I think the one with operational efficiency was wrong, and it was second, so that the first and third were the correct ones
Fahad, i believe you were not expected to write five pages essay. I just gave the description of sensitivity analysis in a couple of sentences.
In regards to all the written questions in Sec B, I always tend to write a lot more than required – just in case.
I missed out 10 marks worth of questions but made sure I wrote more than enough for questions on sensitivity, capital structure theories (even drew graphs! ), Q1. B (can’t remember the question) etc.
Quality>quantity. They do not give additional marks for lenght, you have to be concise and up to the point.
Lizphil, yes, but they already gave you the calculated current receivables to save your time. Both methods are trues, as Jenny mentioned
They gave you the actual figure for current trade receivables, thats how Dhaval calculated 60 days.. No one used 40 days
Part B Q5. I explained sensitivity analysis, then calculated the sensitivity of the selling price which was about 10%. Which meant if the weak SP came to pass (35% probability), then the NPV would be negative.
So, guys, my solution to question 3:
1) saving in finance cost: 60-35/360*26500000*0.05 = 92014
2) advance cost: 35/360*0.08*26500000*(0.07-0.05) = 41222
3) cost of factor: 26500000*0.75/100 = 198750
4) bad debt saving: 26500000*0.01*0.7 = 185500
5) 50000 saving in admin costsThats how i got my positive benefit of 87000
Michael, i fear we were not asked to calculate sensitivity in part b of question 5. Just definition
Use boumal model to calculate cost???1 percent should be less or not from 5 percent??
@Gvtftf give your question 3 some rest now lol, you will find out what the solution is when the questions are up 😉
And, Fahad, font show yourself as an answer guru who knows everything and keeps it in secret. I have already seen your solution of question 5…
Gvtftf you’re right, but it did say to critically discuss in terms of the project. So I thought it would help having a figure to discuss.
I don’t think I’ll get any extra for doing it as they didn’t ask for a calculation
In the question where we had the Dividend growth model, could we not have calculated the growth rate from g= ROE * Retained earnings?
ROE was given I believe at 12.5% and Retained earning could be taken as 1 – % Div payout ratio?
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