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@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 loanHow 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%
Hello,
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
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 payableAnd 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
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 questionAlso 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.
Come on people someone reply to me!
Whoever had WACC as their question 32 (second C question) please let me know how did you calculate the convertible debt!
As per the scenario, the convertible debt was to be converted to 20 shares if i recall correctly or redeemed at nominal value (100). The odd thing about the convertible bond was that it was the first exercise i have encountered that it did not say how many years until conversion or redemption which i found very strange and unnecessary!I discounted at 3 years. I thought the statement was dated end of 2016 and redemption/convertibles was in 2019? But then my post-tax interest didn’t come to much at all so I think I made a mistake somewhere.
For the 3rd project the initial cost was $5200, as far as I remember. The ROCE I had is 21,8%.
Cash flow 9000/4years minus tax 22% and minus amortisation which is 1100. Initial cost+residual value/2 (5200+800)/2.
Guys, how did you come up to 38,8%?Thank you for your reply. I did not see that it mentioned a year. Was your WACC question about the directors views which linked with M&M tax theory and traditional theory? What additional reasons you wrote for the debt and equity financing?
do you remember what was cover in Sec B ??? and someone who got different set..??
I wouldn’t worry too much, I definitely did something wrong with my cost of debt because my IRR was so low. 10 mark question so I’m sure we still picked up a few!
Yes I got that question too, I mentioned redemption and control as my other two factors. What about you?@yana. What did u get for your NPV calculation and Net saving
I hope i did not loose more than 2-3 marks to be honest from the 10 mark WACC.
For the other part of equity and debt i wrote that with equity financing shareholders will have their shares diluted and this would cause issues etc.. and for debt financing i talked about the possible setbacks of high gearingI also got 58 days in section B for days.
Section C WACC I had a very high % for COC and using IRR for COD was 2.3% very low and I used the bank interest less the tax.
Found Section A quite tricky and section B the foreign exchange question was really difficult
did anyone get turqoise co in sec a in which it was asked to find net total of dollar recepits and payments using forward contracts
Yes thats what i did.
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