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I believe, for the the option for the whole project, so the NPV of the project would be Pa (Price of the Underlying Asset), and It would be Put option.
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my WACC for q3 was 9%… i got negative NPV in q1(b)… any1 else???
I got WACC of 9% for q3. Also. Just wondering about q1 part. C. Was this a case of using the NPV Fromm part b and then using pa pe r s t to work out the call option then. The resulting put option?
Cheers
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any idea if we put pa amount wrong in that question so we will loose entire 9 marks or some marks will be awarded for the rest of the calculation? guyz do tell me
In question 3 we had to calculate wacc after including the cost of debt that was given in question, I too did it wrong without including the cost of debt. And yeah the paper wasnt that tough BUT it was time management that got the better of me (2 hours for question 1) though I managed to answer questions worth 88 marks or so… had only like ten minutes left for q3
For bsop. I used the pv from first 2 years only. Which started everything off as a negative answer!
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Zain224, I read your post: “December 3, 2013 at 5:13 pm” , I agree with everything. Did the same thing.. even if we are wrong, we will get marks in parts and wont loose all 9 marks just like that…
OK paper. Very time pressured. I answered it all but could have wrote far more I just didn’t want to over run
Q1. Should get a good few marks for the WTO. Npv I got about 11.8m in dollars I think. Used that as pa in the bsop and got 26m? I was just throwing down answers to make sure I answered it all. Q3 I got 12.5 for me and 9.2% for wacc. Did anyone do q4?
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Del.
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Could someone please respond to:
How they went about part b & c for q3?
b) Implication for Share holders of parent company (M Co) for 50% premium as compared to 30%
c) Otherwise additional cash that was required and how could the parent company arrange it?- Topics: 0
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what’s about 2 contract types mentioned in scenario? I know only about Sukuk from the SA. I also tried Q4 but in c) i wrote only the main principles of Islamic finance
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thanks johnwells just hope and pray we both will pass
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in 1st question Pa was NPV of project in year zero, but Pe was at year end 2..thus Pe should be discounted at year zero?
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Well thought that the content in q1 was not too bad.
Made one mistake in that I did benefits an drawbacks for the company of WTO instead of country. Stupid really.
Also had too many digits in working- should have rounded down figures more. Time for this q was a joke. At the allocated time I had just worked out down to operating profit! Had to sacrifice marks in the rest of the q.
Delta part I know I also answered badly!
How did you manage the foreign tax in q1?? The local tax was higher so was fully taxed in the country meaning no further tax once repatriated?
For Pa I used pv of years 0,1,2 as that’s when sale would occur.
But that’s also why I had a negative Pa as the costs of the machinery etc are not yet recovered.
Anyone agree?Pa should be T3 to T5 discounted back to present value terms I think.
Time was a killer in this exam – I got WACC as 9% for Q3 as others have mentioned.
Sell rate on futures market – what do you mean? There was a loss of 4 ticks and a gain of over 100 on the futures if I remember correctly? Was around $760k total – forward was $772k.- Topics: 0
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WACC @ 5% do not know who that happened =)
Carl29 – the tax agreement would have brought a cash inflow if there was other overseas income to offset (my opinion)
So I stated it’s not obvious that there is other overseas income to offset against hence no benefit.Yes Q4 was fairly easy. The last minute article reading helped. Thats the only one i am fairly sure about
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I thought that you would need to tax the profit on the specialised part that was purchased from the home country. I could only find the sale price and not the cost so just taxed the whole sale.
It was interesting as people say as soon as you hit the time limit for each q move on, yet was difficult to move on in q 1 with no answer
The specialized part i tfrd into Mp currency and included cost in cash flow….?
Cazza99 – thats pretty much what I showed in my calculation, at least someone’s with me on that one!
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