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

Question 5
the figures may not be same as mentioned in exam paper. please just show me the working method. …..let suppose

Sales $25,000,000
Cost of sale
material 35% of sales
labour 25% of sales
production overhead 20% of sales
inventory
material 30 days
WIP 35 days
finished goods 45 days

Accounts receivable 66 days
accounts paybl 82 days
Wip is complete 50% of work in terms of material ,labour , and prod overhead
finished goods are in terms of material , labour and prod overhaed
trade paybel are in terms of material and prod overhead

overdraft are estimated on average $1,000,000 at interest rate of 4% and long term debt has an interest rate of 8%…

required:
what isthe annual interest paybel of short term and long term debt in respect of investment in working capital ..

@vipulv said:
This sounds more like mine though my first one defo C. Last was A lol do you remember any questions?

50000 n resell 80000 profit 7000 something?

6000 benefit

ROCE or interest think i chose neither D

Yeah I think I got $6000 benefit too. I think i chose ROCE would increase but interest cover would have decreased but only because I world that out (didn’t work out ROCE so guessed)
One of them was about share prices and I got $7.25
And another you had to select a % increase or something and I remember I got 0.24% (think it gave you a figure you sold to a bank then bought it back 90 days later or something)

Me too got 10% wacc and npv 1630

@mc20united20 said:
how come? :O
Every year 3000 cashflows and investment is 9000 no scrap value. the target of roce is 15% and Payback period 2.5 years.

all i did for payback period was deducting the investment from yearly cashflow, that means it took 3 yrs.

for ROCE i did was, for avergae investment: (9000-0)/2 and average profit ((3000×5)-9000)/5
ROCE = 1200/4500 = 26.7%.

I don’t know what did i miss in that question? :S

I also did the same and got 26.6 something so I choosed the ROCE option only. I guess you wudnt average the capital investment as there was no scrap hence there was only input throughout the investment and you keep it at £9000. So maybe you and I are wrong!

@sunny12 said:
Please try to solve this….specially requested to open tuition…

1. cost of equity 10%
current year no dividend
year1 no dividend
year 2 0.25
year 3 0.50 and it will be increase by 3% subsequently
calculate market value using dividend valuation model…..

2. Repo …sale an item of asset on $1000000 and will repurchase after 90 days on $1009862 ..assume365 days a years
what is the value of interest paid….calculate in %…

3 Share price increase ….(i remember just 2 option)

a .10 when an investment has positive Npv…
b. 20 announce the plan to the financial expert and shareholders…

4.. Government assisstance…
a. govt make a legislation to increase employee wage.
b. to construct the roads…
c .
d …..

Q1 A 7. something

Q2, I guessd

Q3, When announced

Q4, Gov assist chose last 2 options …. one was on rails, other i think minimum wage…. why wud gov only increase manufacturing … felt only last 2 options were corect. 3 n 4

@mc20united20 said:
how come? :O
Every year 3000 cashflows and investment is 9000 no scrap value. the target of roce is 15% and Payback period 2.5 years.

all i did for payback period was deducting the investment from yearly cashflow, that means it took 3 yrs.

for ROCE i did was, for avergae investment: (9000-0)/2 and average profit ((3000×5)-9000)/5
ROCE = 1200/4500 = 26.7%.
Yes its right)
I don’t know what did i miss in that question? :S

Why in Wacc calculatuon in calculation of debt you think that Irr method should not be used? I have done it with IrR method..

Here is my answers
b
c
d
c
d
b
d
b
c
d
a
a
c
a
c
b
c
d
c
a

Dou you remember in Mcq 20 in A variant mentioned that only bankers is connected yes?

@sharique123 said:
MCQs Answers:
B
C
D
A
D
B
B
B
C
D

Q1 (A) – Comparatively Easy Question in the Paper to Handle:
NPV = + 1,848 (It is exact figure not approx)
Candidates were required simply to incorporate the effect of tax and inflation.

Q2 (A) – Tricky Question:
Forward Hedge was favorable. Value under forward hedge : 230,175 (Exact Figure)

Q3 (A) – Most difficult question of the paper:
Q3 (A) (i) – Market Value : 991 per loan note (Exact Figure) – No share option
Q3 (A) (ii) – Market Value : 942 per loan note (Exact Figure) – Share Option
Here I want to mention some mistakes which some people can make. Firstly if you have calculated the conversion value after seven years then the nominal value at which loan will be redeemed must also be taken at seven years. It means discounting only at 1 year backwards + you also need to discount one year interest payment backwards because value for comparison is available after seven years and loan note value can be found at seven years but one year interest payment must also be discounted.

Q4 (A) – WACC – 9.94% (Exact figure) – Here I want to people tell that whether they have calculated the cost of debt (Kd) using IRR method or used formula (i(1-T)/P).

Q5 (A) – Interest Payable = 211 (Exact figure).
Here 2 things must be considered that WIP was 50% complete so must be excluded from the working capital.

what about mcq from 10-20? Do you remember the question number 20?

Average should be

there was no scrap value in npv question……….

Tough

1. cost of equity 10%
current year no dividend
year1 no dividend
year 2 0.25
year 3 0.50 and it will be increase by 3% subsequently
calculate market value using dividend valuation model…..

Ans.

i did this wrong in exam mime answer (7.35)…. but these were forecast values,we would have discounted the value after year 3 to PV of Y 0
calculation : (0.5*1.03)=0.515 then 0.515/0.1-0.03 =7.35 now convert to Pv 7.35*.751=5.519