AFM*** P4 June 2012 Exam was … Comments and Instant Poll ***

From the comments, the way I felt and friends feedback I can easily see the pass rate drop to 25 %. if not lower...

My first attempt and... wow! Haha, that sort of thing should be illegal.

Utter madness.

@deanogerrard said:
But question 5 was not about european debt crisis. It had one sentence saying the country for the potential subsidiary suffered from a debt crisis. The question was about identifying the risks in the case and discuss how they can be mitigated, so there were other more important risks in the question which could be mitigated against.

I second you deanogerrard,
Q.5 was not about European debt crisis it was just a company, where it was located(Losania) was facing economic crisis.

Well it was a company preparing to enter a country which is facing something similar to the European debt crisis. Think about the possible interest rate hike to curb high inflation, banks who're not willing to lend etc.

so difficult and quite different from past papers....

what a disaster, found this subject hard to study even though i passed my F9 on first attempt. anyway i had a feeling i will fail even before i sat down to it! Spend loads of time studying and it seems like i waste. i kept getting so confused and could not understand what the examiner is actually wanting of me. Towards the end my mind actually went so blank that i could not remeber the simplest formulas like IRR so i made up my own formulas and definitions! what a nightmare sitting! good luck to you all guys!

i miss boy ryan.. :'( ...

Anyone of you guy answers the part ii of question 1 using P/E. I can not think of anything else besides P/E :((. This part is really disasterous !!!

takamori said 4 hours, 1 minute ago:
Q1:
a. FCFF
b. Percentage changes in share price as a result of acquisition
c. Percentage changes of an extended project (Black Scholes Model)
d. Likely reaction of both companies and discussion on assumptions made in part c

Q2
Consist of 3 proposals
Proposal 1
Further borrow 2m and share buy back
Proposal 2
Further borrow 2m and invest in NCA
Proposal 3
Can’t remember

Impact of these proposals on forecast financial statements

Securitisation

Q3
Swap
other factors to consider before repayment of debt using equity

Q4
IRR/MIRR
Value at risk

It’s not complete. Can’t remember that much

WOW! What a great memory!
Q2, Propposal 3 was about selling some production assets (cease some activities) and spend the money on expanding of some other activities without spending of fixed assets

aasthag said 1 hour, 7 minutes ago:
The first question made absolutely no sense to me. I couldn’t understand what was I supposed to do for the percentage increase in both company’s share prices.

The same for me. I wrote something just not to leave free space

@eugeneksc said:
Well it was a company preparing to enter a country which is facing something similar to the European debt crisis. Think about the possible interest rate hike to curb high inflation, banks who're not willing to lend etc.

I can understand what your saying mate, but to me the debt crisis was one of many risk factors that could be discussed. I actually found the scenario quite contradictory because it was saying the country was suffering from a debt crisis but also inflation was high and employment was high which would be signs of prosperity not austerity.

Question 1 is quite difficult...but managed to do the FCF and option and bit and pieces hopefully could get some marks (maybe 1 or 2) extra)

question 2 was ok

I did 4,5: didn't expect interest rate swap coming skipped that question; npv and irr are ok but can't do value at risk; not very structured answer on question was running out of time to think about point but yea I think FX hedging was hidden there when the last paragraph mentioned 'minimise exchange rate exposure', so there is still a tiny fx element

It would be great if anyone would share his answers for question 1 especially what was the share price?

the girl sitting diagonally in front of me used 3 booklets. madness. I didn't even manage to complete one.

The value at risk question...

NPV per annum = 2,200,000
Standard deviation per annum = 800,000

Question: Given a confidence level of 99%, find VaR for a one year period and five years period. Briefly explain what it means.

My answer:
1 year = 1,864,000
5 year = 4,168,031

greater than the NPV, lol at my answer!

This was the first time I ever wanted to just cry at the question paper in the exam hall! The main problem was Q1, it was too complicated thus too much time was spent trying to comprehend the question, and ofcourse then not much time was left for the other questions. I was happy with Q4 though.

I just cannot accept the fact that all the effort I put in for the past five months could have been nothing but a waste, and I am talking full sat and sun classes after five days of work.. and studying every night after work, going to work like a zombie the next morn!

ACCA examiners need to understand that we do not have enough time to dig out information buried in between their words or to think for anything longer than a minute for one question! The time constrain is just ridiculous! Only when they set questions based on our time constrain will we be able to tackle the paper. I don't know of even one student who has ever said that three hours was perfectly sufficient! So, why is it that the examiners just don't seem to care! Perhaps it's true that all ACCA cares about is money.

I hope the examiner actually reads the feedback most students on here give. I have got a Maths degree and have sat all the papers of ACCA and passed all of the rest.

This is now the 3rd time I have sat P4 and yet again the questions are completely different to anything I have ever seen. After receiving tuition, a revision refreshers course and revising for months I am just left deflated.

I can understand questions having to be different. Of course they should. They are in every other paper I have ever sat.

However the way the questions are asked in this exam are so vague and complicated it is untrue. Bob Ryan may have been more difficult mathematically. But at least you knew where to start. 3 and a quarter hours is not enough time for this exam. 3 and a half days and a bit of luck, I might have had a chance.

I got 12 % as the WACC, but i used the same beta. i didnt know how to split the beta that was not relevant to the project.

I wish examiners will be more direct with what they want and stop making us look like fools because we are not!.

Beta of Efflu is 1.4 in total but 1.25 for other activities which excludes production componet, so does that mean the Beta to use is 0.15 ? i thought so much about this and wasted time? To complicate it, he also gave us the percenates attributable to other activities for Debt and Equity in Efflu (this is why i ask, what did the examiner actually expect). We dont need these kinds of twist in the exam hall under time pressure.

In practise, all these twists and turns are not like the way it is made out to be in the paper.

I have tried my best, no time to complete this paper in 3 hours, too many confusions to derail us!

NGOSYVINH- yes for question1, part ii, in the valuation of shares after the share repurchase I used PE ratio to find the value of the existing share, which I then used to compare the value of the share after the repurchase.

Don't know if it was right but I really couldn't find any other way to find the difference in value.

@lakeside said:
I wish examiners will be more direct with what they want and stop making us look like fools because we are not!.

Beta of Efflu is 1.4 in total but 1.25 for other activities which excludes production componet, so does that mean the Beta to use is 0.15 ? i thought so much about this and wasted time? To complicate it, he also gave us the percenates attributable to other activities for Debt and Equity in Efflu (this is why i ask, what did the examiner actually expect). We dont need these kinds of twist in the exam hall under time pressure.

In practise, all these twists and turns are not like the way it is made out to be in the paper.

I have tried my best, no time to complete this paper in 3 hours, too many confusions to derail us!

1.4 is the weighted average of beta of other activities and beta of components part. It was one whole complicated process and at the state I was in at the examination I wasn't so sure if my eventual beta was correct. But thankfully there wasn't a need to find Kd as it was given, otherwise that 8 marks would be too time consuming. Whatever the case, I guess thinking too much about it won't change the fact that it's over and nothing else can be done (perhaps apart from starting P4 revision all over).

@lakeside said:
I wish examiners will be more direct with what they want and stop making us look like fools because we are not!.

Beta of Efflu is 1.4 in total but 1.25 for other activities which excludes production componet, so does that mean the Beta to use is 0.15 ? i thought so much about this and wasted time? To complicate it, he also gave us the percenates attributable to other activities for Debt and Equity in Efflu (this is why i ask, what did the examiner actually expect). We dont need these kinds of twist in the exam hall under time pressure.

In practise, all these twists and turns are not like the way it is made out to be in the paper.

I have tried my best, no time to complete this paper in 3 hours, too many confusions to derail us!

I totally agree..the whole 25% and 80% parting of business attributable to other activities or to components...it was all completely unnecessary! i have never seen anything like that in any of the past year questions.

Horrible paper!
Q1 I used the divi growth model to value the company (putting FCF x 1+g/Ke-g) and got a share price of £7.25! I know this value must be wrong but just had to go with it and write my report on the basis that the offer to buy our company was really low and not worth it...
expecting 40 marks max and I have spent so much time studying on this :(

good luck to you all guys!!

the good news is we all found it difficult !

you have a chance to pass if u r better than the guy sat next to you

I spent 30minutes stuck on 0.26 = r^3, eventually i had to try out a few growth rates and settled on an estimate of 8.5 %.
For some reason i ve gone blank on the figures i managed to arrive at in question one. i rushed to question two after an hour and half as usual in Q1.
Tried so hard not to repeat my last attempt.
good luck to everyone. all the best

Arunah: Still use PE, but i am not confident on my answer. I assume number of share is the same for Mije (10 Mil). Earning for Mije co increase 150,000 $ (cost-based synergies) so the share price of Mije increase= (3,350,000/10,000,000) - current trading price of Mije ( i do not remember). The share price for Nente, i think i totally wrong when assume earning per share is the same. What about your answer?

@arunah said:
NGOSYVINH- yes for question1, part ii, in the valuation of shares after the share repurchase I used PE ratio to find the value of the existing share, which I then used to compare the value of the share after the repurchase.

Don't know if it was right but I really couldn't find any other way to find the difference in value.

One positive thing about the exam was a good distribution of marks.Q 1 was very challenging. Its only method marks that can make one pass that one. Its amaising though how people are worried about the their final answers, In this exam like P2 its next to impossible to get the exact answer. The exam is about your grasp of the concepts not how accurate you are with numbers because there is no time for that.

Q5 was the easiest. I am expecting 18/20 at least. I even answered the blackpool trading with possible consequences etc

i think Eps should not be the same. because nente was an unquoted co. and M was a quoted co. i took 8 PE for Nente. ..:)