*** June 2023 ACCA AFM exam – Instant Poll and comments ***

Hi, I got in part A a NPV investment in a subsidiary in another country. I got a negative NPV over 4 years discounted cash flow, is that correct? I am sure I did something wrong but hopefully I might score something there. For the exchange rate I used the interest rate parity formula. There was also a question requiring ups and downs of investing in a country that has free trade, stable economy, low taxes.
Question 2 was about a club which was incurring losses and was within an reorganisation and two proposals were provided. The requirement was to re-do the SOFP for current year and do the P/L – both for each of the proposals. I remember proposal two was not actually duitable, because it was breaching condition no. 3, but not sure I calculated correctly. I recommended maybe an aproach between the two of them (raise some money by equity finance and also sell less players)
Question 3 involved some currency swaps and some exchange rate hedging to calculate. I only had time to do forward rate, money market hedging, and I stopped there because I had no time do to the option one. The other quesiton related to what the interest would be if the company to swap with another one in another country.
Hopefully I would score enough.
Good luck to everyone and I am curios what you did in your exam.

I did noticed and I left a comment before answering stating this. I also mentioned “I will assume the request refers to euros, and therefore I will consider 22.7m euros”.

My variant was different.
1. APV-> NPV + Tax benefits on two loans (normal and subsidised), issue costs, some assumptions requirements.
Sensitivity analysis of sales volumes.
Value at Risk, and how VaR impacts riskiness in investment appraisals. For 95% confidence, I used standard deviation 1.645 in my quick calculation.
The normal loan was with annuity repayments and this made it more complex to calculate its tax reliefs.

2. Equity valuation of combined company, percentage gain for predator’s shareholders. Some discussions on this.

3. Interest rate hedging – forward vs futures. Interest rate swaps, and some quick discussion for information system integration and its impact on decentralised treasury departments.

Well that was an absolute disaster! I will be resitting 100% be lucky to get 30% I was obviously very unpractised in the exams expecting to be able to just apply textbook. Didnt understand what a few questions were asking for.

So glad there was an NPV question though. I was able to critically discuss the points the financial adviser had put down for not including. Sort of discussed the synergies but I found that a bit tricky in understanding what they wanted- was asked in a way to discuss about how the director didn’t think the investment was worth it because of the lack of risk…

Yep, that is the worst sitting I have experienced to date.

Q1
1. For monte carlo and VAR – was it asking to make calculations?
2. Which discount rate you used 9 or 11?
Q2.
3. You got gain 12 right?
Q3.
4. You suggested to use forward or future?
Adjusted 4month – 3 months
5. There was a gain in the future market right?
6. Have you added 2 month remaining base 0.012 ?
7. The future price was based on the increased base rate right?

Hi
Q1 NPV foreign investment in subsidiary, npv was negative. Advised that based on result the investment would be rejected. However other factors to consider such as cashflows after the project and sensitivity analysis. Used PPPT to calculate exchange rate.

Q2 2 proposals to consider to save a club, proposal 1 met all of the club requirements to prevent relegation, proposal 2 only met 2 of the 3 requirements and created a loss.

Q3 money market hedge, forward and otc currency option (couldn’t remember all of the calcs for the option), recommended the mmh as giving the largest receipt (could be totally wrong).
Also, currency swap but I’d hardly revised swaps and had to make most of it up!

Just praying I’ve picked up enough marks to pass.

hey! evn i got 13.9% gain to oxwicks

1st international investment appraisal what answer did yall get? coz im a lil consfused with tht

Got investment appraisal on section A that was very similar to Dec 2022 section A question which I sat and in Section B I got demerger, and currency hedging which was okay but got kinda stuck on the swap question other than that paper was okay. Hoping for a pass.

I got positive NPV question 1.

My exam was a complete train wreck.

For a start, I was late to the exam centre due to circumstances beyond my control. So I was already very anxious and annoyed before I even began. This is my 11th ACCA exam and I’ve passed first time every time. I always use flash cards in the minutes and seconds before the exam to memorise last minute stuff that I then write down first thing when the exam begins. I was not able to use my flash cards this time because I was so rushed getting to the exam centre, and in honesty I could actually have used what was on them, I didn’t remember the sensitivity formula correctly for example – I forgot to account for the tax effect.

Anyway, I had no time to make my answer plan at the start and I had no opportunity to lay out my time plan for the exam either. I had to launch straight in to question 1 without having even reviewed questions 2 and 3. It is crucial when doing exams at this level that you plan your approach carefully, and I did none of that.

I think I did address every part of every question, but nowhere near to the level required. I was so focused on getting text down on the page that I don’t think I made a good hand at applying my knowledge to the given scenario, and again that is a big red mark on these exams. You might know everything there is to know in the text book, but if you don’t apply it, then you don’t get the marks.

I’m 90% sure I’ll be seeing this exam again in either September or December, and it’s all down to bad management of my exam. I feel very upset about it, but what can I do. Got to get over it and try again.

you can rebook this exam and sit in the contingency week exam session.

Got the version with 1 – Project appraisal for foreign investment, 2 – Football club with troubles and two rescue scenarios and 3 – Hedging of dividend. Seems to me that I did ok. Got positive NPV in 1 (PPP to calculate the fx then regular Cash Flow calculations), in 2 both scenarios were positive for covenants (none were breached in both scenarios) but the examiner deliberately said about the 20X9 season where revenues were to go up by 40% so to me it was clear that the sale of players creates a huge risk of not being able to stay in division and eventually not being able to capitalize the boost. So the second option (with employee cost 60% almost breached) was better for the long term. For 3 I did MMH, Futures and Options and Futures gave best result. For swaps I had no time to finalize but managed to explain what swap is etc. Hope I will pass but seems to me that I did really well