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Metis June 2012

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA APM Exams › Metis June 2012

  • This topic has 5 replies, 3 voices, and was last updated 8 years ago by jessiechong.
Viewing 6 posts - 1 through 6 (of 6 total)
  • Author
    Posts
  • August 22, 2016 at 3:25 pm #334547
    ebtuci2903
    Member
    • Topics: 7
    • Replies: 13
    • ☆

    Hi sir,

    I just looked at the question of Metis ,June 2012 exam . I don`t understand how has been calculated the Tax on operating cash flows and Free cashflows, on page 16 of the exam paper.

    Thank you

    August 22, 2016 at 7:05 pm #334582
    Ken Garrett
    Keymaster
    • Topics: 10
    • Replies: 10591
    • ☆☆☆☆☆

    PBIT = 31,200
    Tax rate = 30%

    Tax on PBIT = 30% x 31,200 = 9,360

    Free cash flows = PBIT – TAX + Depreciation (not a cash flow) = 31,200 -9,360 + 120,000 = 141,840.

    We need to get the the figure before any interest payments or tax relief on interest. Discounted cash flow is applied to pre-interest cash flows.

    August 22, 2016 at 8:42 pm #334605
    ebtuci2903
    Member
    • Topics: 7
    • Replies: 13
    • ☆

    thanks,Ken

    August 25, 2016 at 4:56 am #335030
    jessiechong
    Member
    • Topics: 2
    • Replies: 17
    • ☆

    Hi Ken,

    May i know how to derive Terminal values of returns from the project to date?

    2010 – 154,892
    2011 – 271,392
    2012 – 303,626

    Thanks

    Jessie

    August 25, 2016 at 1:27 pm #335140
    Ken Garrett
    Keymaster
    • Topics: 10
    • Replies: 10591
    • ☆☆☆☆☆

    I must confess I have never been happy with the main part of the model answer. Concentrate on the tutor note coming afterwards:

    [Tutor note:
    The NPV calculation if done for the start of project, would read –
    NPV: Consider the business as a three-year project to date based on an initial investment of $600,000
    2010 2011 2012
    PV as at start of project at 12·5% 126,080 205,199 213,246 gives a total of $544,525
    Hence NPV at start of project = $–55,475
    This yields similar comments as in the model solution.]

    August 27, 2016 at 1:55 am #335466
    jessiechong
    Member
    • Topics: 2
    • Replies: 17
    • ☆

    Thanks Ken.

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    Posts
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