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Crazy easy even as a first timer, but time again was the enemy, did 82%, hopefully God does it for me
Tbf – was only a disaster as I’d not done anywhere near as much practice questions as I should have. I focused too much on Int Rate/Fex management rather than key stuff like bonds.
Next time, will nail it.
Paper was fair, hoping for a pass question 1 fcf and share price valuation of bond based on 6% coupon and coupon as computed, analysis of agency issues. Question 3 business valuation new sofp and projected income statement, part b assessment of finance contributors acceptance of restructuring! Q4 can’t really remember rushed this part cause had 20 mins left to read and answer
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I got $7.17
Oh, and Apple watches should also be banned as well as calculators that can store text….just saying ???
relatively easy once the exam is over and you are revising but in the exam it was something else!!!!
Thought it was a horrible exam paper. Questions contained different topics mishmashed together. Unlike any other paper I can remember. Q1 was a beast. I spent way too long on it. Even q2 was too long with interest options and collars for 10 marks after the big tabular fx thing .
Did q4 also in 15 mins should have done it 1st and given it 35 mins. Got discounted share price of 20 dollars approx.On the face of it look, it didn’t look like a difficult paper. Wasn’t sure what Question 1 (b) (ii) was all about- implications of the debt issues. I ended with a discounted value of $17.7, Question 2 looked easy but just switched off on the inter company cash flow thing and cld write a thing. Had 15 minutes to scribbled down something on the Integrated reporting, memorised the topic 2 nights ago but couldn’t lay thoughts down intelligibly. Hope this 3rd time lucky.
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I’m wondering what I did to end up with a discounted SP of $7.17!!!
It seemed straightforward. Revenue, operating profit, tax, asset purchases at 43% of revenue increase equals fcf. Calculate initial period then terminal value, then subtract 40% for debt then multiply by 80%. I always miss something glaringly obvious though!
I am not sure the debt value should have been deducted from the PV of the FCF. The debt only came through after the equity issue and as such should not form part of the current value of the business. Just my thoughts, I might be wrong.
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Why why why!!? Why do p4 paper ask so much from us within so limited time!?
I remember getting a 9 point something, not sure if that was my discounted or Gross price
Any one answer question 4? What does the application of integrated reporting principle to financial strategy mean?
@demashi said:
On the face of it look, it didn’t look like a difficult paper. Wasn’t sure what Question 1 (b) (ii) was all about- implications of the debt issues. I ended with a discounted value of $17.7, Question 2 looked easy but just switched off on the inter company cash flow thing and cld write a thing. Had 15 minutes to scribbled down something on the Integrated reporting, memorised the topic 2 nights ago but couldn’t lay thoughts down intelligibly. Hope this 3rd time lucky.Got same share price! So may be we are right! Didn’t deduct debt which may have also been correct but put some note that debt was not deducted under assumptions made in the report!
Found the paper reasonable but still was pressured. I didn’t the silliest mistake no one could ever do in P4 on question in finding share price otherwise my share price would have been around 9. Did question just dumped all my P1 knowledge on it.
Very correct, I think that it the correct answer to be fair, any other value apart from 11… full, 9….. discounted should be wrong, because the cost of capital given is a geared cost of capital and the company wanted a DE of 40:60, you have to treat it that way, the layout you gave was what I did, and should be the only correct layout.
I have good working knowledge of Levered and unlevered free cashflow and I have valued many companies my self so it is bang on correctSpent too long on question 1 and it seems like from comments above I missed some steps so didn’t get the same numbers like.
I agree this exam had many different topics.
Q2 was time consuming on the netting then onto futures and collar options calculations. Did anyone calulate 2 futures and 2 options? How did you approach.
Had 15 mins for Q4
P4 Question 4 On integration was similiar to a P2 Q4 question I think in Dec 13. I just put some reasonable comments on integration reporting (being more than just the numbers and other factors like environment- Topics: 0
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I seem to be in the minority to have not done question4! I took one look at all the discuss verbs and imedietly crossed it all out.
I did 1, 2 & 3.
My discounted share price was $7.something.
I took debt off because the WACC we were using of 10% said it was after the issue of the debt.On question 2 I calculated 2 options and 1 collar (it explicity said not to do futures)
In question 3, the last part worth 13 marks, it said evaluate but i was just writing comments, did anyone actually do calculations?
Hi Kitty,
On question 2 I remember it saying futures are not required. But the it said we should review both hedging choices (collars and futures)which were futures now collars.
This threw me back abit.
Kirsty did q3 as well, for last part took all different shareholders Patel directors etc and calculated their pre and post earnings per share and concluded that investment was worth their while solely based on eps, hope was right thing will just have to see! Didn’t study hedging at all so wasn’t even an option!
Disappointed with what questions came up this time. I had anticipated a foreign project appraisal for Q1 and either Black Scholes pricing model, currency hedging or a cost of capital related question for Q2.
I struggled through the exam trying to pick up marks where I could and using exam techniques to show my overall knowledge in the hope of gaining marks. Hoping to scrape a pass but I think I am reaching a bit.
Tackled Q4 after Q1 and wrote a lot but more from my working knowledge and not my studies. Think Q4 was a bit of an odd question but might turn out to be my best answered.
Q3 was a complete reach I tried to bring as much out of the question I could but dont think I have answered this well.
I studied extremely hard and was basically undone by the choice of questions. Guess its my fault for not going through the whole syllabus but in reality I don’t think most people actually do.
Fingers crossed the markers use a bit of expediency when marking this paper.
Q1 was alright bar the element about the second coupon, I wasn’t sure how to calculate the coupon. Got around 10.7 for the discounted share price. Calculated FCFF and took 60% as equity as the cost of capital given said it was after the debt issues. Duration & effect on bond price due to interest was a nice question.
Found the calculation elements of Q1 a bit less demanding than other papers.
Q2 Multi-Currency netting was a nice question, done a good few in revision. I just put the amounts in at dollar and calculated the balances due as requested. Part two was confusing because it gave futures details. Question only asked to do options and collar, so thats what I did. Wasn’t 100% sure about my numbers so did a good few theory points, how a collar is set up etc.
Struggling for time so only made about 12 points for whole of question 4. Treatment for suppliers seemed to be common sense. Crazy time pressure as usual but hoping I scraped a 50.
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