AFMJune 2021 ACCA AFM exam was - Instant Poll and comments

Re the foreign investment appraisal I think tax was payable in same year. That’s what I did anyway but I could’ve misread. I’m just hoping I did enough and didn’t make too many mistakes under the pressure!

afmp4 wrote:To Nataly

Tax was same year. Yes, component price was $250 which I converted but forgot to include in workings. What did you get in APV? There were no issue costs? and also at which rate did you convert tax shield and subsidy? I assume we needed to convert ?

Yes that's right. Thanks for confirming :) Did you also get a negative NPV (around 1.27 million) before considering the real option and then a postive NPV of 305 million after considering the real option?

Sorry to hear about that. I calculated the bond's YTM and took that as the cost of debt. For cost of equity, I assumed the proxy company's all-equity WACC to be the ungeared cost of equity and calculated the geared cost of equity using MM Proposition 2. Then I went on to calculate the WACC using the market values of Sundo Co. The WACC was around 9.2% for me.

nataly1986 wrote:

afmp4 wrote:To Nataly

To Nataly Yes there was no issue cost, hence that became part of the assumption that we needed to list down. The first part of apv was easy. The interest being paid on loan into tax rate and subsidy benefit was 3 percent if I recall correctly into 80%. Because tax was 20 % The latter part of apv was difficult as we had to apply discount factor to both subsidy and tax benefit and then convert to US dollar. A similar question in pilot paper 2013 by the name of Tramont is there. But as I practised one question of apv with a tax delay of one year. It automatically guided to calculate Apv under such condition and 6 marks gone down the drain..which can come back and haunt me. What a silly mistake exam pressure can impose.

Additional value created was 167 for merger question. Gain to target was 74 under cash flow method. Gain to predator was 54% initially to which examiner wanted to know. How much amount to be paid if 60% is to be achieved. Can anybody confirm any of the numbers?

I truly feel for you. I've experienced 'technical issues' twice now back to back, once at a centre and once remote session, and the only response was to withdraw the entry and refund the exam entry fee. It was truly frustrating to study for the same exam all over again and face the same issue again. And now I'm terrified of writing cbe's because this issue can happen again and the only response from the ACCA Team would be to withdraw the entry and book for the next session which not only renders my effort moot but is also causing me to delay my other career plans. I really do hope they find an alternative than just withdrawing entries. Hope you don't face the same issue again. :)

afmp4 wrote:nataly1986 wrote: afmp4 wrote:To Nataly

Were there any tricks with Ke calculations? I simply put Be into formula, however there was Ba as well but I don't remember anything about capital structure change

nataly1986 wrote:afmp4 wrote:nataly1986 wrote: afmp4 wrote:To Nataly

If a debt is being used to finance. Then capital structure is changing Come to think of asset beta should have been used. ba not Be. equity beta includes more risk due to debt. But as we were doing apv. We would discount cash flow under normal cost of equity Ba and then do the financing effect for apv . But I never got to that part as I skipped foreign appraisal from syllabus and stopped at basic Npv calculations.

97shoree wrote:Question 1 – Foreign investment

Joint venture and subsidy caught me off guard as well and I was prepare to leave it , as saw nothing like that in syllabus or past exam, but as I had time . Just thought about it and it was quite simple when you think the nature of the two. Like can't have transfer pricing advantages and tax saving. Also not being able to fully control having all the voting power. Power struggles . All such issues if operating as a joint venture..and similarly having more capital at your disposal. More synergy if operating as joint venture. Perhaps more expertise from.human capital

97shoree wrote:Question 1 – Foreign investment

Haha question 3 on mergers was actually too simple for the calculation part. Can't make more easier than that. But the discussion part was challenging as three companies were involved altogether. He presented his scenario in a very traditional linear way. But the requirements was very odd that got my head rolling as the examiner wanted the perspectives from different companies on different matters not just strategic importance of being acquired. Considering there were 3. I actually wrote a from a Pov of a company that was not asked for. He even asked what if two target companies merged that the acquirer is seeking to acquirer . I read that requirement twice before answering it. Like he seriously wants to know that as well Lastly for treasury department, was asked in managing economic risk. Not conventional risk management and this question never appeared before. Economic risk is outside the realms of treasury department and discussion was to be carried on thT

Where in India were you supposed to write the CBE? I'm from Bangalore, and in March, the CBE location was in some remote place on the outskirts of the city and was afraid of something similar happening which is why I decided to wait it out until June, but faced technical difficulties nevertheless.

As always time pressure. And now the optional exams will be on CBE which means even more time pressure. We should all complain about it to ACCA. The should increase the time for the CBE to 4 hrs at the optional level. The US CPA exams are also computerized but the duration is 4 hrs. What about ACCA? It's unfair to because there are no technical difficulties related to network, typing, freezing screen etc with paper exams. But these extra difficulties are part of the CBE. So we should all let them know our displeasure.