FMJune 2021 ACCA FM exam was - Instant Poll and comments

I thought it went OK but now I'm second guessing everything. Sensitivity analysis and risk /return theory I think I wrote a lot for little marks. Also last question in section c about cost of equity and project specific cost of equity my percentages capm were 18% and 11% respectively. Anyone else? I'm convinced I have failed this.

Did anyone else get the sensitivity question where the contribution was $200 but no other pricing was provided for the NPV calculation. How did you answer the question?

CHERYLLOVATT wrote:I thought it went OK but now I’m second guessing everything. Sensitivity analysis and risk /return theory I think I wrote a lot for little marks. Also last question in section c about cost of equity and project specific cost of equity my percentages capm were 18% and 11% respectively. Anyone else? I’m convinced I have failed this.

Same here! Second guessing it all! I got the same percentages for CAPM although after the getting the second one, I did a weightage of the two, and got a new percentage, because I was scared its too little work for too much, I dont know if that was right. For the sensitivity analysis I messed up the calculation question, and I realized what I was supposed to do but ran out of time, dont remember how many marks it was for... I am just hoping to pass the exam

I got 18% and 12% using capm.

I got 17.8 and 10.90 for my cost of equity

The NPV and Sensitivity was pretty tricky. I got 11.75% for the sales volume sensitivity. Idk if this is right though

I took my capm and multiplied them by the market value of equity for the cost of equity in $. I did a wacc also just for the sake of it as I got a bit confused but came back to it and fixed it. Sensitivity analysis is took the npv over the contribution and got 10.28 or something around that. Section b wasn't great for me. Can anyone remember the npv for the project in sections c question a?

dve1 wrote:The NPV and Sensitivity was pretty tricky. I got 11.75% for the sales volume sensitivity. Idk if this is right though

do you remember how many marks the sensitivity part was for? Just the calculation?

CHERYLLOVATT wrote:I took my capm and multiplied them by the market value of equity for the cost of equity in $. I did a wacc also just for the sake of it as I got a bit confused but came back to it and fixed it. Sensitivity analysis is took the npv over the contribution and got 10.28 or something around that. Section b wasn’t great for me. Can anyone remember the npv for the project in sections c question a?

Did you discount and account for tax in your contribution?

I got the same for sensitivity

Manakiwala wrote:

dve1 wrote:The NPV and Sensitivity was pretty tricky. I got 11.75% for the sales volume sensitivity. Idk if this is right though

NPV was 8 and sensitivity was 4 with the written bit being 8 marks

No I did not. :( why would you change the contribution? As its before tax?

CHERYLLOVATT wrote:No I did not. ? maybe I’ll get one mark for knowing the formula….haha

I think the subsidy was before tax not sales but who knows

We talking about the sensitivity?? The government surplus for npv I put at the end of the cashflow as it was tax exempt

Contribution is sales - variable costs, so SALES 0 VC 0 Contribution 200 Fx. (10) Net cash flow 190 Tax Etc

11marks

To find the sales volume sensitivity you need to discount sales - discount VC and account for tax. This is because sensitivity is NPV / Present Value of variables. Well that’s what it says in my notes anyway, I could be wrong

Did anyone got a loss in the last year of Foreign Npv

When working out the cost of equity - is CAPM alone the cost of equity? Or is it CAPM * Market Value of the shares = Cost of equity? I'm not sure about this and now I think I have got it wrong. I worked out the CAPM and thought I was fine as that is the cost of equity. Didn't bother working out the market value of the shares.

michaelrhys89 wrote:When working out the cost of equity – is CAPM alone the cost of equity?

Think you needed to work out the market values of equity and debt to find the project specific cost of equity

Yeah I defo didn't get any marks for what I have done then ha. Hopefully I have scraped some marks for theory

Ok i voted for OK not easy even though this was by far the least challenging compared to all past papers and could be done well in time, guess examiner is finally mindful of our feedback to make it possible in time . The reason not being easy as there were no free knowledge marks. The scenario had to be dealt with and discussion carried out I screwed the Apv part ,there was no tax delay but i considered it. Lastly i predicted foreign currency and foreign investment wont come, its biggest mistake to ever guess AFM , especially now CBE format is here, exams are different for candidates instead of one universal paper, Some candiates got interest and real options those were my core strong, but due to guessing those marks gone down the drain.

mainai92 wrote:dve1 wrote: michaelrhys89 wrote:When working out the cost of equity – is CAPM alone the cost of equity?

Did you use the 1.25 beta or 2.3 beta to degear the beta?

I didn't get any CAPM question. But yes the sensitivity analysis of the contribution was confusing. What were you guys' answer for IRR?

mainai92 wrote:

dve1 wrote:

mainai92 wrote:

dve1 wrote:

michaelrhys89 wrote:When working out the cost of equity – is CAPM alone the cost of equity?

I’m not sure, maybe we calculated equity and debt differently for the proxy company. It was a pretty tricky paper

mainai92 wrote:

dve1 wrote:

michaelrhys89 wrote:When working out the cost of equity – is CAPM alone the cost of equity?

Yeh that sounds like what I had - 19% at the end I think from what I can remember?

Did anyone got working capital and Npv (contribution 200per unit) ques in sec C

Yes, I got that, how did you solve that?

Yes, me. What were your answers for the operating cycle, miller orr model? And the NPV and sensitivity of IRR as well. I left the contribution question.

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