*** F9 June 2016 Exam was.. Instant Poll and comments ***

Don’t you remember what exactly the question was?

Expansionary fiscal policy => increase spendings;
Contractionary fiscal policy => reduce spendings;
Expansionary monetary policy => increase money supply;
Contractionary monetary policy => reduce money supply.

Does anyone remember what they got for MCQ? I managed to write mine down.
Got:
A
C
B
D
B
C
B
D
D
D
C
A
D
B
A
D
C
B
C
A

Negative NPV for first four years. As others said depreciation should not be in calculation. Only the tax allowable amount on depreciation which was 28% of $400k / 10 years. Think it was $112k a year

@mynameisearl said:
Hi,

The mcq’s were really hard.

There was one i should have known the answer to but could not work it out. The cost of equity. It gave the dividend 10p, p/e 5 times, d/C 4 times. What is the answer?

Thanks

Dividends paid = 0.1.
Dividend cover = eps/div = 4. => eps = 0.4.
P/E = market price per share / eps = 5. => m.p.s = 2.

Cost of equity = dividends paid * (1 + growth rate) / market price per share + growth rate.

I don’t remember exact numbers, but I think growth rate given should have been adjusted for particular period.

Same, is this right?

@mynameisearl said:
Q5 part b i did in perpetuity as it said ‘foreseeable future’ and i got a really high npv. But it really confused me and i felt so unsure if that was the right thing to do.

WACC q i forgot what to do and deducted tax from bank loan interest rate, not sure if that was right.

Q1 – im not sure if what i wrote was ok for overtrading.

Q3 – hedging, the fo was better and about £6k less than the money market hedge.

Mcq – sensitivity analysis i got 10% but felt so unsure as got my self confused with the tax, think i ignored it in the end.

I guessed a lot if the mcqd.

I chose leases for i think it was mcq 1.

Sensitivity was for sales volume. So take contribution. If it was for price, than take sales revenue.
NPV = 200
Sales = 4000
Variable costs = 2000

(4000-2000)/200 = 10%

For the sales volume I included the tax as I thought reduction in sales would = reduction in profit so less tax payable so I got 12.5%. I thought a lot of the multiple choice were really tricky in this exam and made up for the easier long questions ?

The answer was D – reduced government spending and increased money supply

The m and m multiple choice …can you believe i put agency cost and the last option … i thought agency and issue costs was the same

Can we list all the mcqs and answers?

If anyone can remember

Yes, I got same number & negative NPV

Invert yield

I remember mcq on interest on repurchase.

96.5 = 96 * (1 + interest* 50/365)