- This topic has 150 replies, 107 voices, and was last updated 11 years ago by
.
- Posts
when i saw the paper i said ” wow i know the whole paper”
then stuck on mv of debt and equity in question and in this tension ruined the whole paper.for the first time i knew every thing but couldn’t attempt due to stress of that one point.
to solve ke
we were supposed to use Ke = Kei +(1-T)(Kei-Kd)Vd/Ve
Other data was for other company but Vd and Ve was to be used for the main company and was not given at all.
just this thing ruined my whole paper.
Paper was very very easy. But the time constraint got me. Now that i think about the paper. Just one more hour and i would have nailed it! Did question 1 in the end, missed out on the FCFE EASIEST part and share price valuation. What was the Ke guys? And what about the forex question, fwd market was the best option in my answer script with the answer in the range of 1.5m £ something…
- Topics: 0
- Replies: 118
- ☆☆
I am really upset over examiner..this is the only one paper that he is making us feel that its from different world. He is not in line with rest of the papers which even time pressured is answerable..how can u complete in 3 hrs with so mych of complications and different track from previous questions..he has to come back to earth and should take sensible ,practical and doable appproach…paper was nighmare …
Question one was def MM for ke and then get wacc and do cashflows not as bad as it appeared just very time consuming! Did question 2 fairly i hope and did only part a of question 4 so have done 83% of paper still hope i get a 50! But this paper is by far the hardest and if I don fail will def choose between my two remaining options of p5 and 6!
To be honest paper was not that bad. Yes time was the issue but Q1 Q3 and Q4 almost the repeat of previous exam sittings. I think if one can follow the good exam techniques (time allocation) then it is not impossible to pass. I hope I passed if not at least I know what I should be doing next time.
- Topics: 0
- Replies: 6
- ☆
i want to meet the person who voted that paper easy up there…
- Topics: 0
- Replies: 4
- ☆
Q1 was a really long scenario & extremely difficult to complete in the time!
Q2 Synergy & Valuation before acq & after acq – using Free Cash Flows / P/E ratio – was pretty hard
Q3 Hedging – Matching question wasn’t too bad
Overall found the exam v.tough to complete in time – and as always scenarios overwhelming under exam pressure!Q1 (a)
used MM model to calculate ungeared Ke of Competitor firm. It was 11%Q1 (b)
Used 11% calc above to dicount free cash flows before and after BAhari project. The firm value was around$ 550 Million. Value of Bahari project was calculated using APV method. It was around $ 10 M.Q1 (c)
Asked Whether the unsecured bond holders will accept the debt to equity swap or not.
The debt was 10 yr, 13% coupon, nominal value $40M (please correct figures if theyre wrong)
According to the swap these bondholders will get 10% of the co’s equity shares after listing.
10% of shares would be 550M x 10% = 55 M
This is to be compared against the Market value of debt. Which I calculated using 7% Discount rate.Q1(d)
Calculate the range of initial share issue prices assuming 100 million shares.
I simply divided 550M/100 = $ 5.5 per shareAssumptions in calculating share price.
Reasons why a company would want a listing on stock exchange.
- Topics: 0
- Replies: 10
- ☆
I could not concentrate and so for me was a disaster. Our exam hall is too packed 100 to 150 students, so much noise chairs and desks scrapping the wooden floors. Pens and calculators dropping on the floor because the desks so small. My neighbour couching consistently. Mobile phones going off in peoples bags despite being asked to turn them off.
Hey ho back in December then and P3 next week!!- Topics: 0
- Replies: 7
- ☆
How much marks would be cut out of 12 marks in q 3 as I had no time to do forward rate and money market hedge , I only did the options part , so how much I would be getting out of 12 marks . I don’t know may be I was in rush thts why forward and money market went out of my heard , just didn’t occur to me that I had to do those things other than the options . This was the only qs in which I could have scored good marks and I blew it , Damn !!!!
- Topics: 0
- Replies: 3
- ☆
I used the APV method to work out the bahari project. As I used the APV and FCF to work out the value I took out the value of the debt. Was really confused about the share price question. Don’t know what happened there.
<cite>@adeelb said:</cite>
How much marks would be cut out of 12 marks in q 3 as I had no time to do forward rate and money market hedge , I only did the options part , so how much I would be getting out of 12 marks . I don’t know may be I was in rush thts why forward and money market went out of my heard , just didn’t occur to me that I had to do those things other than the options . This was the only qs in which I could have scored good marks and I blew it , Damn !!!!I assumed 2 marks for forward and 5 each for mm hedge and option
<cite>@mat3myh said:</cite>
How are you supposed to de-gear the cost of equity with out the ERP to find the beta??it was M&M (2) with tax formula
Q2 (a)
Discuss the different type of synergies.
Which of these types are relevant to the acquisition of Strymon co by Hal coQ2 (b) What is the premium on acquisition that Hal co would pay on the equity value of Strymon.
There were 2 methods to calculate equity value of Target co.
P/E method AND the other involved ROCE and using 3 years earnings into perpetuity or something, didnt know wtf that wasQ 2(c) Calculate the gain on a share of Target company in each of the following case
…Cash offer of $ 5.xx / share
….Cash offer of $1.x per share + 1 share of Hal Co for every 2 share of target co.
… Cash offer of $1.x per share + convertible bond of $100, paying 3% pA, for every $5 nominal value of target co shares. The loan is redeemable at par in 6 yrs OR convertible to 15 Hal Co sharesQ1- did anyone else use M&M 2 (with tax theory) formula?
Q2- Value of combined co was new p/e x combined earnings + synergy benefits?- Topics: 0
- Replies: 3
- ☆
The paper was horrible. Especially for question 1. I used a lot of time trying to figure out the cost of quite to use. I finally used the m& m preposition to find the cost if unguarded company .
Don’t even know if I got this right
Awful, very upset 🙁 like the subject, feel I understand it, well revised but totally failed today. Too much to read, too many calcs, too many interdependencies within qs so I couldn’t pick up the subsequent parts’ marks. the beta blocker got me too – needed rm? put ke at 10% but that seemed to produce crazy figs an went into a blind panic…
- Topics: 0
- Replies: 1
- ☆
never felt like this at a paper, and i had the impression that everybody in the room was at same level. very very complicate! will go again in december wishing in a better paper.
- Topics: 0
- Replies: 17
- ☆
<cite>@coolbreeze198 said:</cite>
It was the most horrible paper in my whole acca history. :X
Im a straight passer with all papers attempted in one sitting but this paper just threw me off completely.
Does anyone else feel it was a disaster, or is it just me?Same Here…. Passsed 12 Papers till now…. 11 Papers 1st Attempt…. 1 Paper 2nd Attempt….
Attempted P7 nd P4 both were difficult but the winner is P4 WHAT THE HECK WAS THAT……<cite> @thehardone said:</cite>
Q1 (a)
used MM model to calculate ungeared Ke of Competitor firm. It was 11%Q1 (b)
Used 11% calc above to dicount free cash flows before and after BAhari project. The firm value was around$ 550 Million. Value of Bahari project was calculated using APV method. It was around $ 10 M.Q1 (c)
Asked Whether the unsecured bond holders will accept the debt to equity swap or not.
The debt was 10 yr, 13% coupon, nominal value $40M (please correct figures if theyre wrong)
According to the swap these bondholders will get 10% of the co’s equity shares after listing.
10% of shares would be 550M x 10% = 55 M
This is to be compared against the Market value of debt. Which I calculated using 7% Discount rate.Q1(d)
Calculate the range of initial share issue prices assuming 100 million shares.
I simply divided 550M/100 = $ 5.5 per shareAssumptions in calculating share price.
Reasons why a company would want a listing on stock exchange.
WOW. I just remembered.. the first question companies were both mining ones i.e same business but different financial risk which meant ungeared KE could be used as cost of capital.. right?
At any rate, my numerical answers match yours but my discount rate was different (assumed) since Q1 (a) was a part I just could not solve, completely panicked. Assumed KE 15%
- Topics: 0
- Replies: 1
- ☆
@mat3myh. I did the same, obvioulsly it was wrong (not for 9 marks for sure)..
- Topics: 0
- Replies: 11
- ☆
<cite>@mat3myh said:</cite>
How are you supposed to de-gear the cost of equity with out the ERP to find the beta??Use ke=kei+(i-t)(kei-kd)vd/ve formula i guess
- You must be logged in to reply to this topic.