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3 hours in this exam honestly is almost a suicidal mission. It is even more so considering ACCA is hellbent on throwing many and unnecessary curve balls. Throwing that many curve balls would make sense it the time allocated is appropriate. The pass mark reflects this and hasn’t improved for years. I wouldn’t be surprised if interest for the qualification wanes in the future as many of us would warn others not to go near it. So exhausted from the many resits because of this!!!!!!!!!!!!!!!!!!
Exam is too time pressured and hope the markers will take this into consideration. Thought I was sitting the wrong exam at one point, after seeing some of the requirements. Question 3 was hedging, I believe the options were the best option. Question 2 – impact on SFP, EPS I struggled with as time ran out.
Hardest exam I have ever sat. Nothing came up that I had thoroughly revised for
Q1 – optimal capital structure
Issuing bonds and change to cost of capital with credit risk ratings
Cost of capital specific to the two projects
Sukuk vs conventional bondsOnly needed to calculate the new cost of capital but there were no npv calculations so lots of speculation on the assumptions and impact on finance and business risk
Q2 – swap costs vs futures and risk aversion commentary of the treasury team
Q3 – mbi and effects on employees and managers
fcfe, synergy in perpetuity. Work out the recommended offer price and gain or loss on per share after combinationAwful paper. Will be lucky if scrape 50!
I thought the paper wasn’t too bad but highly time pressured:
Q1 was NPV with quite a few factors to take into consideration especially with tax on both sides!
Assumptions in the calculation of NPV
Also had 4marks on the role of the WTO which was pretty specific
Sensitivity analysis to work out % change in sales price to get NPV to 0
Simple duration calculation (2marks)
Concerns regarding sensitivity analysis and duration calculations for 6 marks – again pretty specific so not sure if I picked up many marks hereQ2 – restructure, change to SOFP, EPS and WACC – very time pressured question!!
Q3 – Hedging foreign currency risk – forwards, options and futures. A lot of explanation required on basis too which I thought wasn’t very clear. For this question I thought the requirements were pretty repetitive??
They’re making the exams easier from September by adding 20 professional marks to all of the option papers so I don’t think interest will wane and this will massively improve the pass rates.
It was my first time sitting this paper. Found it hard! Can someone please confirm if you get marks if your method is correct but the answer wrong and you make assumptions based on those.
No, there will still be 100 marks in total, 50 marks to pass but 20 out of the 100 marks available will be for professional skills like with SBL. So you will essentially have to write 80 marks of knowledge but in the same time frame as you do currently for 96 marks of knowledge (you get 4 pro marks on option papers at the moment).
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Exam was extremely time pressured!!
Absolute joke paper, so many variables, and then after trying to work out the calculations you have the explanation. I did the first half an hour fine then i just sat there for an hour doing nothing, before leaving half an hour early to put myself out of my misery. Im having a beer tonight and a week off before trying for a retake in June. My last paper too.
Echoing most of the comments already made, horrible paper. I doubt I’ll scrape 50. Will be my first resit.
Should’ve done AAA instead. Oh well, onto ATX for my final in June.
I yet again don’t see the point in exams that aren’t grounded in the day to day reality of what accountants actually do – and if you happen to have a poor memory like I do, it doesn’t matter how well you understand the principles behind it all, you’ll fail because you can’t remember all the proformas and different methods to use with the supplied and not supplied equations, even though the highest flying accountants use Google like anyone else when they can’t recall things.
My answer for currency options was significantly different than futures and FRA. Is it just me or this was the case?
Not a nice paper at all…
I sat my exam today at 1.30pmThe last q3 was shocking. All about valuation of business Shobdon
Like u studied and did many questions and past papers… never did I come across a question like this before!
Q2 interst swap or futures
Got the swap part 100% but only worth 4marksThe future I struggled to finish.. always confuses me
Q1 Cost of equity and cost of capital
This was quite a confusing question got muddled wondered if I was on the right track..Not an NPV in sight ??
Resit for sure in June and that was my 2nd time sitting that darn paper !!
Exactly what came out for me..
The Shobdon question was so overwhelming..
MV of equity was given without the value for debt
Tried to work that out using Modigliani and Miller Proposition 2 equation..
It was crazy mehn! I barely answered 70%
Hi guys,
Can anyone help me piece together this paper. Just trying to estimate my marks as I think I failed miserably, but I cant remember the Questions. Some of these may be wrong but I have it so far as:
Question 1
Report Format (4 Marks)
Investment Appraisal NPV (17 Marks)
Something with Treasury Dept (6 Marks?)
Assumptions on Appraisal (6 Marks)
WTO (4 Marks)
Duration (2 Marks)Question 2
Sale Price of Division (4 Marks)Question 3
Forex Hedging (9 Marks)
Basis (4 Marks)
Investment Policy Framework (5 Marks)These are guesses!
Thanks guyshi, Can you elaborate on this please? I am genuinely curious as to what could have been such a big question on it?
I was supposed to take this sitting but skipped it as I felt slightly less prepared.
Ridiculous paper! This is my 3rd Professional paper and this blows the other 2 out the water in terms of complexity and time pressure. How this is not 4 hours yet SBL is is actually mind boggling.
Question 2
Impact on SOFP, EPS and WACC. 9 marks
Evaluate decision to sell coffee shops. 6 marks
Evaluate the NED’s proposition. 5 marks.
In regards to the last one i had it down as a demerger? What about everyone else?
Thanks for that, I still need to piece together the Rest of Q1 and Q3 then just.
Question 1
Report Format (4 Marks)
Investment Appraisal NPV (17 Marks)
Something with Treasury Dept (6 Marks?)
Assumptions on Appraisal (6 Marks)
WTO (4 Marks)
Duration (2 Marks)Question 3
Forex Hedging (9 Marks)
Basis (4 Marks)
Investment Policy Framework (5 Marks)Yeah I had it as Demerger too but I just sort of explained the general advantages/disadvantages but didnt link it to the financials of that particular company
1. Sensitivity analysis of changes in s.p as regards revenue to bring it to zero.
3. Advantages of decentralised treasury function
A. Explain basis and basis risk.Thanks guys.
Is sensitivity there relating to Modified Duration?
And for the Forex question there are normally Forward Rates/Money Markets/Currency Futures and Options but am I right in saying there was no Money Markets option here because there was no Interest rates given?
My exam was not the hardest one, however there was a lot to do and no so much time to do it….
I had following questions:
1) a) Provide the WHO requirements and how free trade agreements between countries may impact the investment
b) Prepare report for investment, where:
(i) Calculate NPV, where there was a lot of variables. The most tricky one was the double tax treaty, where there were different tax rates 30% and 20%. Also the exchange rates have to be calculated. I had positive NPV around 2mln, however I was not sure whether it was correct.
(ii) Discuss Assumptions, so just wrote about WACC, inflation, revenues, exchange rates etc.
(iii) Calculate Duration and I had 3 years and 2 months. I did not calculate the sensitivity analysis of revenue
(IV) Evaluate the duration and sensitivity analysis
2.
a) That was hedging question. The Company with base currency USD has to pay 18,250 mln EUR on 1 August and now was 1 March. All futures expire by month end. There was requirement to perform analysis the forward rate, futures and option rates.
For the Forward it was quite straight forward as we have 5 months forward rate so I had multiple 18,250 EUR by higher rate of EUR/USD and it was around 21,300 mln USD.
For Futures we have contract price 125k EUR and we have to use 164 contracts. Also the contract date was by the end of September. As the payment was on 1 August the unexpired basis was Futures price-Spot price * 2/7. The total amount was around 21,200 and it was the best option
In the option I had used September put option and It was the worst beneficial as the premium was increase the cost by 21,400.
b) Compare additional scenarios and different rates were provided for futures and forwards. I have calculated it the same as in point a) and still Futures was the best option.
c) Reasons of creating local treasury departments and benefits.
3. The question relates to the disposal of coffee shops and investment in juicy bar division
a) (i) Calculate the price of coffee shops division. The CF was provided and i have calculated FCFE and used dividend model to value the company. It was around 3,800 mln.
(ii) Prepare Forecast Statement of Financial Position. In this I had something messed up with Current Assets
(iii) Calculate EPS. In my calculation the EPS increased by 11%
(iv) Calculate WACC. I have calculated new equity beta and used CAPM
b) Advantages and Disadvantages of disposal coffee shops
c) Benefits of the Demerger proposed by NED.
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