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@mohsin1992 said:
for mcqs of roce and payback
everyone of us has calculated the payback right i.e 3 which was greater than 2.5…..rejected
For roce it was a calculation based up on initial investment
So according to formula it should be 3000/9000 i.e 33 percent or by another way 15000/9000 its even greater i.e 166 percent…
and if it was asked for average investment then again its acceptable 3000/4500(9000/2) which is 66percent
by all formulas its acceptable and greater than 15percent……I got payback as exactly 2.5 years and it missed its ROCE target of 15%, as I got 13.5% for ROCE
@laurlou said:
zero coupon bonds mcq, i said $100 anyone else?I said $100 too
@mustii said:
with conversion, of the 4% growth and 6% growth, I remember the question asking what the market value is on each now?, it didn’t ask what they should take? the market value would then be the npv of each? which are both under 1000?I messed up though, because the question say the loan notes are for 8 years, or redeemable to shares in 7, so when I did my cash flows to find mv, I did interest 1-7 years annuity, and wrote that I am assuming interest payments would stop after the loan note is redeemed as shares after 7 years..
Maybe I got this one completely wrong lol..
@Mustafa,
I calculated interest for 7 years too, at most I think we will only loose 1 mark for that@zvix said:
Roce was based on initial investment not average investment. so there was no need to divided the 9000/2.. therefore roce would come up as 13.33. below target. so reject.I also got 13.5% ROCE and 2.5yrs Payback. So below ROCE target, but met the Payback target.
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organisation having investment appraisal with significant poistive NPV,,share price increases in semi-strong efficient market: the timing was :
a.after announcement to investors and share holders (20th or 22nd)
b.after announcement to financial media (25th)
i chose ( a )
what is the correct answer : 20th 21st 22nd 25th@sharique123 said:
Comparison is necessary required because without conversion you cant know which value will be higher conversion value or bond value? It is necessary to discount from 8 years to 7 years (1 year backwards) + 1 year interest.Agreed – for the first part I calculated NPVs for the conversion after 7 years and nominal redemption after 8 years, and chose the higher (latter) value. For the second part I calculated the NPV of the conversion again but with the 6% yearly increase, and chose this as it was higher. Bit tricky since I hadn’t seen it in a question before but it makes sense when you think about it. I wouldn’t worry either way though, should only be max 1-2 marks lost.
Overall I thought the paper was OK, not the easiest set of MCQs but nothing too out of the ordinary in Section B.
@fbawany said:
I said $100 tooi said $100 too! because i figured they dont earn interest so their value will be the same! hopefully its correct.
@vipulv said:
I would think so. As we knew we had to tax by 28% too. I would be suprised if i do not get mark for that.Anyone remember the format of section B. ?</bblockquote
the 2nd part was asking about how to incorporate working capital in the investment appraisal having inflation and tax….EPS report income to shareholders? Correct or not?
Increase in EPS also increase in Capital Employed?Anybody knows ans of this MCq
Please where did that working capital question come from?? i have solved more than 10 past papers but never seen such.
@diyaaa said:
EPS report income to shareholders? Correct or not?
Increase in EPS also increase in Capital Employed?Anybody knows ans of this MCq
I just neither. EPS is not to do with capital employed. Its ROE then ROCE.
EPS report income to shareholders also not true in my opinion.
Paper style changed somewhat from previous papers and specimen paper. Really hope I pass because the format is changing again from September 2016 and this means more MCQ.
I recall 11% WACC and +NPV.
Good luck all and onwards to June sitting.
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