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Q1 was definitely buy futures and call options. contract was quoted in $ and we were buying $ from an expected euro receipt.
Q2 for APV i used CAPM to find the pre finance discount rate using only asset beta. Got discount rate of 15% If I remember correctly??
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Did any attempt Q3.Is simpler than Q 4.benefit of M&A and valuation us in Net Asset basis and simple cash flow!
Hi,
In Q1 did you have to calculate 2 years of cashflows or just one I thought it said at the top of the QS it was going to fund project by two years cash flows??
Thanks guys
Hello guys and hope best of luck with this exam.
March 2016 mark allocation for Q1, Q2 & Q4 was as follows:
Q1) (a) Purchasing Power Parity Theory & Economic Exposure – 6
b) (i) Dividend capacity calculation – 9
(ii) FX Hedging strategy – 14
(iii) Dividend pattern and if the project was adding value – 8
(iv) Discuss about methods of financing – 9
+4 professional marksQ2) (a) Adjusted Present Value Calculation – 18
(b) Concerns of shareholders regarding financing structure – 7Q4) (a) Black Scholes calculation of real (call) option to delay. Discussion of assumptions & issues – 16
(b) Rho factor explanation and the effect of change of interest rates have on this option (call) – 5
(c) Possible funding from World Bank and specifically from International Development Association – 4i did and yes i agree it was reletively very simple easy and straight forward question. i got a value of 104m using net assets method around 110 something using members earning mathod and 150 using cashflow method.
how many of you had a marginally negative npv in question number 2? mine was -1.47 base case npv if i remember correctly. While after adding the financing side my APV came out to be around $7.4m something positive.
i was able to attempt on 74 marks exam. Q#1 really made it a nightmare of exam for me coz i attempted that question in the end and due to that i was not able to even attempt the part b’s ii and iii hence 22 marks were unattended. Altough i am very certain that ques 2 and ques 3 which i attempted were brilliant. but i dont think i’ll be able to pass by just attempting 74 marks exam no matter how good i performed in those 78 marks.
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Q4- Pa-15 and Pe-15 ????? Pv of CFs ?
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Yes this is correct … Pa=15 (asset value) and Pe=15 (Pv of +cfs) …. as NPV=0
Today at exam center an uncle of age around 45+ came with his son to appear for exam. His son told me his father is child specialist doctor and now doing this qualification because in his view it has scope in future more than medical profession. He has passed 10 papers with self study. He serve in day time in govt hospital and in evening run his clinic. His father told me that he started this qualification to motivate his son but his son left it and he is continuing. It was completely a shocker story for me. Total change of profession. But I salute his spirit and got much motivated by his story.
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Hi guys. I used pa of 15 and pe of 13.99. Instead of using the zero npv i used the projected negative npv. Do I get some marks at least 50percent of the question or do I miss out on it entirely for using the wrong pe?? Pls help out
I did it wrong too but will only be a couple of marks in hindsight i think it should pa=16.01 because it took it from npv -1.01 to 0 with 15 investment meaning 16.01 must have come into the project. And pe=15 i think.
But hey ho as long as calculations are there they will allocate some marks. We will just lose those specifically for pe/pa which ever is wrong.
Question 1
I used March Future n March Call option..But people are saying June..
Do I get some marks at least 50percent of the question or do I miss out on it entirely for using the wrong month? Pls help out
I’m really worried.
Question 4. My Pa was 13.99 also…Lord I’m worried- Topics: 0
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I did Q3. It was merit and demerit of M&A.
Also valuation based on net asset basis and fcf The merit and demerit must be based on the scenario.What were the answers if you remember? Only cash flow details were given with total assets and liabilities if I remember
Hi dear i have also written pa 13.99 its not a deadly sin only 1 or 2 marks will be deducted but if there is mistake in d1 answer then there will be 0 marks
.. dear i have attempted part b well but messed up in qs 1 can u tell what u written in qs 1 last part …i have calculated div capacity and hedging in very bad presentation and didnt wrote enough on ans just did like rough work will this be accepted?- Topics: 0
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I also had 13.99 as Pa,,,let us wait and see.
Hi, mu guess is, you will make it . At least, to the best of my knowledge, you did better than me.
You actually brought me to light as to what I did not know was expected of me.
Well then, Good Luck on this coming 18th April, 2016!
Hi there, no worries, the marking scheme isn’t quite like that. Just for one P/E ratio or any other figures, you will not be penalized wholly instead just the allocated mark.
The examiners would like to see your presentation and your understanding in tackling the particular scenario, thus you will still be rewarded with marks for your remaining answers although these figures isn’t right in its own right.
No worries, my friend and Good Luck when the result is out this coming 18th April, 2016.
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