FM*** June 2022 ACCA FM exam – Instant Poll and comments ***

Did anyone get a WACC calc for their first question on section C? My cost of debt was actually negative, the post-tax interest payments were something like 8% over only 3 years. That, plus convertibles, less MV was actually negative? And my IRR was really low? I don’t know what I did wrong but I’ve never seen a negative total before? My overall WACC was 11% I think

Also did anyone get the NPV vs IRR section C question (comments from director A and B) I found this really hard to compare as I thought they were very similar appraisal method?

did anyone got sec B question from interest rate ....

yup

What about merits of NPV and IRR?

I got 58 days too

cost of equity was 0.85(1+0.06)/5.55 + 0.06 which I got as 22.24%. Its pretty high compared to usual but thats what I got. 10 marker wacc

I got 58 days too

I got this too. Just tried to write whatever I could remember about the positives and negatives of NPV and IRR

What did you get for ROCE in C section? I’ve got 27% but wasn’t sure if I have to adjust for tax.

Section C, cost of equity i got 22% cost of debt 3.8% and also bank 3% then wacc as 15.8% ,i also got npv as something starting with positive 55.... Who got the same?

i got the same for cost of equity and debt but i think bank loan was the one i messed up on. NPV i got 55 something as well. It was a 4 digit positive NPV right?

In npv questions do we need to remove that 100m and 50m cost

Did anyone get Funzo project question? What was NPV for that?

I got NPV of £2k and ARR 39% so said both should be accepted (section C) I had a EOQ question and said if discount was offered then that should be taken ahead of the EOQ did anyone get these?

I put bank overdraft but im not sure. What did you get as answer?

For section C I got an NPV Question and ROCE and computer ARR and it said to discuss the acceptability of the project. I got a positive NPV and the ARR i think i got 38.8% It then asked me to talk about risk and uncertainty linking proabiltiy analysis and payback period I mentioned that risk assign probabilty whereas uncertainty does not. Moreover that the increase in risk depends on the volatility and uncertaInty depends on the project life. It also had a question on EOQ and bulk discount discount I got a net saving EOQ=6000 AHC=720 AOC=720 For bulk i do not remember but obviously the Q and the price had to change and everything else was fine Then i had to discuss the cash holding and factiors of lenght of operating cycle

Section I got NPV and question on factoring

@msiraj87 Same, got a positive NPV, 2.6 (I think) payback period and the factoring was more profitable Section B were tough on that one, section A was alright

Hello i cant remember how much i got for each individual cost however i think i got WACC 16% something and for the redeemable debt there was no indication for how many years so i discounted the redemption value and the interests with year one discount factors! I then did IRR based on 5% and 10% discount factors and got 11% cost of redeemable. Also for the bank loan i used the market value used for the bonds in order to calculate the cost of debt because it did not mention either the nominal value of the bank loan or the market value! It was the first time i saw a question not mentioning the years for the convertible loan and no market value for the bank loan

How did you calculate the cost of the redeemable debt? I found the redemption value and then i discounted the cash flows (MV) + conversion value + after tax interest (based on 5% and 10% to find NPVA and NPVB in order to do IRR and i found 11%

Anyone who got Wacc question with CAPM model? and what was the wacc?

Hello, @faisal Hope u okay. iii) What was the 2 mark question in SECTION C for operating cycle? Was it asking to calculate the optimal cycle days or quantity? Thanks

@sumaiya Hello all is well Thank u Do u mean the question that said Discuss the factors affection the cash operating cycle? (4marks) I mention the factors which was changing in rec day Inv days And payable And how certain strategies such as conservative and aggressive could effect the cash cycle. By including quick ratio and current ratio. And i explained further as well

@faisal Nope. That was on the next page. So there were 3 questions on the page, i-EOQ ii-BULK PURCHASE DISCOUNT and then there was a question iii- optimal something.... for 2 marks Do you remember that question Also you know for ROCE, do you remember how much was the initial cost? Initial cost Residual value 800,000 Cash flow 9000000 Tax 22%

For those with the Section C WACC & NPV questions, how did you find sections A & B? For the WACC was the debt Redeemable or Irredeemable? There were a lot of theory questions in there

Hello. My exam part C second question was WACC. There were three types of costs. Equity shares, convertible bond which had redemption value so i assume it was a redeemable one and a bank loan. How did you work out the convertible bond cost? I did IRR however since there was no indication on how many years this convertible was to be redeemed or converted, i discounted the redemption value and the after tax interest with year 1 discount factor. Also for the bank loan there was no indication for either its market value or its nominal value so with what denominator did you divide the after tax interest to find the cost of debt?

Hello. My exam part C second question was WACC. There were three types of costs. Equity shares, convertible bond which had redemption value so i assume it was a redeemable one and a bank loan. How did you work out the convertible bond cost? I did IRR however since there was no indication on how many years this convertible was to be redeemed or converted, i discounted the redemption value and the after tax interest with year 1 discount factor. Also for the bank loan there was no indication for either its market value or its nominal value so with what denominator did you divide the after tax interest to find the cost of debt?

sukhic wrote:For those with the Section C WACC & NPV questions, how did you find sections A & B?

sukhic wrote:For those with the Section C WACC & NPV questions, how did you find sections A & B?

@hannahbrown Was your WACC question the one with the three types of costs? Equity, bank loan and convertible? Was it written that the convertible was for 3 years? I did IRR for the convertible and found around 11%

The comprehensive exam was okay provided one has gone through the overall lectures of the Opentuition platform.