June 10 Exams POLL Paper F9 was Post your comments here

@ rv,for 1b i wrote some junk about the co having to considr debt factoring and invoice discounting,cost of financing receivables,cost of discounts compard to interest on overdraft etc.i couldnt just leave a blank space,hey! lol

It’s a disaster, I think i have to try it again in Dec

@sonalimadnaik said:
Can anyone plz tell me if the first q was an EV q or a simulation model q?? Coz i think i was a simulation model q..similar q is there in kaplan text,,

There would be no difference in ev calculation but you have to define scenario planning in discussion like it considers multiple variables and its effects

Seems like examiner Is changed….
Aaaah!

for the dvm second part , first we had to calculate 3rd year value of cashflows in pepetuity from fourth year vid a constant rate of 3%. i.e 1/1.331 * 70cents = 52.59cents

then v had to divide 52.59/ 0.1-0.03 = 751 cents or $7.51

question 1 , fist part answer was 2100000 in positive
second part answer was 3800000 positive
third part ,v hd to find probability of getting negative balance i.e 20% * 30% =6%
fourth part i am not sure but i think answer was same as in the third part

Having done a degree prior, I found the paper a lot easier than Revision kit questions. Looks like the f9 examiner adopted a degree question format approach.

LoL @ complaining to acca about the exam! did the exam cover anything thats not in the syllabus? NO! So,relax,friend and start preparing for december re-write.im gona be doing a past exam paper every week til december.that shud at least get me a 50

The best think to do is wait for the results. Trying to tell us how you arrived at figures is worth nothing, just unsettling for the gittering. lets talk about how it was not how you answered,,, not interested. The exam was not good. Why? they left out 85%chunk of the f9 content. 5O% is all one prays for. Good luck guys.

i wrote some junk about the co having to considr debt factoring and invoice discounting,cost of financing receivables,cost of discounts compard to interest on overdraft etc.i couldnt just leave a blank space,hey! lol
lol.. i wrote the samething

i included interest cost in the NPV calculation.. i think i will lose 2 marks for it as i should have identified the stupid trainee’s mistake in part (a) then should have calculated NPV correctly.. damn!
and in cost of debt.. i didnt include overdraft in my calculations.. should it have been included?

Overdraft does not affect the capital structure (one of its advantages is it does not affect gearing). It is relevant to working capital management. Therefore, I would not have included it in the WACC calculation.

I think I messed up on the gearing calculation for the company that was considering an offer of debt. I stupidly used the book value of equity to calculate gearing instead of the market value. I’m wondering what kind of impact this would have had on my analysis of alternative sources of finance.

On NPV I forgot to reduce the salvage value for the WDA calculation hence my year 5 cash flows would have been off. From what i gather this did not affect the buy decision.

On the DVM i think the first one was easy. The second one was hard. It was a multi-period DVM which was a combination of DVM and DCF(NPV) analysis. I think that the tuition providers could have done a better job in introducing this. It was a way of the examiner to test the intuitiveness of the test taker. I offered the DVM at 2013 and calculated the Equivalent Annual Growth in the interim period 2009-2013 as being 15% (40c to 70c in 4 years). It really helped with the analysis part because I didn’t think the Director was right in saying that they were in an economic downturn and they needed to conserve cash while promising growth of 15% of dividends in the interim period.

I did not make it to the final 12 mark question about the relationships of investment, finance and dividend decisions.

Probability analysis was 20 % negative balance and 18% probability of exceeding overdraft. Simple probability tree would have helped. It was a simulation created by experts so there is some degree of reliance but the output is only as good as the inputs. Also it seemed as though variability of cash flows was the main concern so I proposed that maybe other factors were more important. Also I said that you could not place complete reliance on the expected values and while its a good aid in analysis, contingency funds are needed to ensure that working capital requirements continue to be met. What I should have been thinking is Baumol or Miller Orr for volatility of cash flows.

Gearing and Ungearing of Betas was a long long discussion, specially with the examples they wanted. It was a test – “did you read my technical article?” If you did, it was probably a gift but the time pressure was high.

i teach F5 so expected value was not problem for me
Q1 a (i) expected value for $2600
(ii) expected value for $1800
(iii) m lil bit confused probability of negative cashflow of period 2 was 9000 x 20% = 1800 exceeding the limit of (2000-500=1500) 1800-1500=300 tell me guys m rite or wrong?