*** P4 December 2014 Exam was.. Instant Poll and comments ***

Q1 was a complete disaster, ran out of time and could do only a, b and WACC calculation.Q2 and Q4 were reasonable specially the theory part of the question. It is my third attempt & last hurdle to qualify. In difficulty and time pressure, this paper is leaving Paper P2, far behind. Last time I manged to get 38%, don’t know what it is going to be this time. Its a total waste of time and hard earned money.

@pedroorange said:
Anyone know if we will be able to get model answer or a tutor’s attempt at the paper from anywhere? This is my last paper and I’m desperate to gauge how well I’ve done!

My attempt was a bit of a scatter gun approach, and because Q1 took so long the written stuff in 2 and 3 tended to be quite brief and included some guesses. Also have no idea how you’re supposed to get the 4 marks for a report, would take twice as long to have calculations in a separate appendix and keep switching back and forth between the two. Hoping I’ve done enough

1) a) is diversification and buying undervalued companies a valid risk diversification strategy? – entering new markets is a good way to further diversify risk as market risk will be diversified. companies will be undervalued when management is not performing well. however in perfect markets the company will not be undervalued. companies more likely to be undervalued in imperfect markets, but this makes these investments more risky. so yes it is a valid strategy although you can diversify risk but your overall risk exposure may actually increase. Basically I waffled a lot on this and not sure how much was correct!

b) why might EU not want Nahara to buy the other co? – competition commission, cons of a monopoly, foreign govt owned so political risk as well

c) i)value of Fugae – g=br, FCFE @ ke, add synergy, time by 7.5, subtract consideration (mvE + mvD). Think I worked out the value of Fugae to be 922.5m

ii) value of luxury transport project with and without option – probabilities (pretty sure I got these right but didn’t include any workings) ,expected value discounted @ WACC (I used Avem’s WACC in error but noted this later on when I realised), black scholes option (just did Pe-Pa to show there was intrinsic value), asset beta of luxury business weighted to .15 and regeared

iii) evaluate i) and ii) – Avem should buy F, should proceed with luxury transport project as positive NPV, should take option as has intrinsic value (assuming £50m paid today)

2 a) centralised treasury – inter company hedging, greater power in the finance market (eg borrowing), can use treasury to achieve group’s targets
decentralised – motivate local staff, can react quicker to local issues, should know local regulations better (eg Islamic finance), autonomy
b) Calculate swap & option – swap seemed fairly easy, didn’t attempt the option due to time
c) Salam – spec not allowed, not allowed for cash, gold, silver etc, must be backed by existing tangible assets, no unethical trades like gambling, must be compliant with sharia law so more expensive to set up

3a) EU Free Trade Zone characteristics and goals – remove barriers to trade eg import tariffs and embargoes, all members treated equally rule to reduce political conflicts impacting trade, competition is better for customers and shareholders eg through lower prices
b) IRR, MIRR, VAR at 95% and 90% – did all calculations, D was better in 3 of them so go for D especially as MIRR is superior to IRR
c) what are the legal costs and how to mitigate – food standards agency regulations/fines, mitigate by Joint Venture, making provisions, pay legal consultants with expertise in that market

Reading what you wrote is so so similar to what I did in exam.
Ci)Did the whole of q1. Same value for fugue, I got 922.5.
Ciii) I recall the question saying something like if avem buys fugue after the project starts they forgo the synergy benefits, so when I compared ci and Cii) I somehow got higher value for ci and recommended it proceed with the acquisition before proceeding with project so it doesn’t forgo synergy benefits. Not sure tho.
Overall thought I reaonably completed q1. But it took me 2 hours. 30 mins each for q2 and q3. Q2 I didn’t complete the option calculation and the ultimate recommendation but did the rest (swap, theory etc) and q3 did everything except explain var and don’t think I did the var calculations properly.

Paper would have been doable with more time. Or less time pressure. That’s the sole problem I had. No time to think, what’s the point…

Let me tell you that , no matter, whether the exam is easy , ok hard or difficult the pass rate is going to be around 35%. All of us know about this. Now if the paper is very easy, then there is a problem, because most of them would have done it well and ACCA will not increase their pass rates. So even if you have made a small mistake you will be penalised heavily. But if the paper is tough, then even a big mistake may be penalised moderately because they cannot lower the pass rates.
So personally, I prefer to face a tough paper and answer at least 85% of it. Then it is easier to pass. Most of the students start off with question1, and get stuck up and demotivated and they cannot answer the other easier questions and this is the reason why so many students feel frustrated. When you are attempting question 1, you must know that you have already scored some where around 25 to 30 marks and this will give you a lot of confidence and you can handle the question better?

@Ramesh you making a decent point, apparently they would have to go easy on marking or too many people will fail. But I, for example, knew how to solve Q1, but because it involved so many calcs I felt behind time and didn’t do well on other questions simply because I had no time to think or read properly. Now I am pretty sure I haven’t passed simply because I haven’t attempted 2 questions with care and was in rush. While I know the syllabus very well and scored well in Q1. So I will most likely fail while some people who performed worse but across all questions and with substantial less knowledge will pass since some marks will be just given to them as a gift for having sh*t examiner. I don’t like that and I don’t like playing these games.
I would never recommend ACCA to anyone because of that.

I totally agree this paper was difficult and there was the issue of time pressure as well. As accountants how does all this difficulty actually help us in practise? I feel the papers have gotten more tricky with each sitting and it feels like no amount of preparation is enough. Only by the grace of God!!!

it was 95 and 90

Going through all the comments, the paper appears to be a real disaster. Well I agree with you guys. But what I can say is hang in there. I failed P4 once. On the second attempt in June 2014 it was even worse and was able to attempt just 70% of the paper and was a sure Fail as I hardly knew what I was writing. I even started studying for a re-sit but when results came, I had got 56%. So miracles happen, just don’t give up. It’s one of your final papers so have courage knowing that you will pass. May tons of luck be with all of you.

the perfect reply in a long time… thumbs up Bro 🙂