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100% meant 1:1 so I guess that was right. But I didn’t calculate the EVA all over again as I presumed the task was to evaluate it. I completely forgot the question asked of assumptions made ;-(
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It will be such a miracle for me too. I can’t give up on faith till the results come.
But didn’t it say debt/equity was 100%? Which means debt was double the value of equity? I recalculated wacc and obtained 8,5%. Eva was anyway higher than original, something around 250.
Overall, it was a disaster…seemed easy in the beginning, I chose q2 and 4 but it was a mistake…I didn’t have time to finish q2 and when I got to write to q4 I realised I had no clue as to what the examinator wanted from us. Q1 was ok, although it took me more than 90 mins to complete…
From what I read about the examinator and other students I am afraid to think what I might score. I am very dissapointed, you don’t even have time to think of what to write in your answer and add this to the fact that the requirements are so twisted…you’ll get a horrible exam. I think I can begin restudying in January 🙁
Big time disaster and time pressured.
Q1 took half of the required time. Then moved to Q2 and thought this would be nice to me but as i started reading scenario i was confused and skipped to Q3 lost track of it after 2 paragraphs. Then sneaked into Q4 but it was wayyy out of my comfort level.
At last attempted Q3 (which I’m not sure is correct) and Q2 (which i thought is my strong area of the syllabus).
I don’t think i could pass 🙁how do you get the percentage of 100% if the amount of debt is double to the value of equity?…doesn’t make sense as it will be more 100%…debt/equity=100% means that both elements have the same value.
First time taking this paper and certainly won’t be the last – absolutely awful. This examiner knows how to confuse people!!!!!!!!!!!!
I’m quite annoyed at how time pressured this exam was!
Q1 just had too much within it and took me way longer to complete. I chose option Q3 & Q4. Q3 was quite nice and i feel like it may be the only thing which switches me to a pass mark! Q4 was actually quite unfair and set you up for a fail, however the management accountant part of Q4 might’ve got me some decent marks.
Overall I felt there was just too much information to get through and too many parts to each twisted question which meant time allocation went out the window!! I can now see why this exam has such a low pass rate
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Can anyone suggest what the hell were we suppose to do with the Porter’s 5 forces in Question 4 i think it was!
One of the threats identified of new entrants in the market was social media marketing to lower prices?
HOW THE HELL ON EARTH WERE WE SUPPOSE TO SUGGEST A PERFORMANCE MANAGEMENT MEASURE FOR THAT, I AM STILL THINKING ABOUT IT AND CAN’T THINK STRAIGHT ON THIS LOL
I think it will be touch and go lol hopefully lol
How did you guys calculated the wacc ?? I assumed the company was 100%. Geared and took 5% as wacc
.16*0/100+ .0476*100/100 =4.76% OR 5% AS round off wacc
The transfer pricing calculation were straight forward for me but I struggled last part of the q2,
6 marks for bsc was also managed quite well as online peak time overcrowded by 540 seats
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I left the transfer pricing question and literally waffled on part 1 on question 1 of EVA so no idea about WACC, I just did some random add and subtract and came up with a +183.1 on EVA and then just commented on it hoping to get something out of that lol
I did not take the amortisation of marketing expens just added 46.2 two years expense as no time frame was given for marketing to amortize the expense
To be honest I didn’t consider the WACC in question 1 – saw that debt/equity was 100% and left it at that, didn’t want to confuse myself anymore.
Anyone remember the rest of question 1? Analysis of the CSF and associated KPI? And something about the introduction of a new IT system?
the wacc calculation needs some adjustment on cost of debt after tax as this was not calculated on the original wacc computation.
At least one good news is transfer pricing should not appear in March 🙂
for WACC I think debt needed adjustment for tax.
Please don’t confuse me the resultant cost of equity should be zero if the company was100% geared
it doesn’t make sense for a company to be 100% finance through debt. didn’t they mention the cost of equity in the case. 100% geared means they don’t have any equity at all.
Wasnt this 100% Ratio D/E? so like 1/1 ? so its fifty fifty – this is how I understood this.
nice to see that I am not alone in this cruel world of ACCA))))
Concentrated on Q3 and Q1, keeping in mind that the Q4 is ok…”oh, it is Porter, 30mins will be enough”. Ended up with no comments made on the first requirement, some vague points on the second part.
My EVA was around 253, however, coming home I found mistake in calculation. I have deducted marketing expense from Capital OB.
In addition, Operating lease seems weird for me: P/L it is 40, in Capital 115? Who can explain why? What i did is assume 115 was capitalized by junior, so I added 40 to 115 and divided by 4 to come up to depreciation. I feel it is not ok.
What is required on p-level is time management. Too many requirements within limited time. In addition, the requirements are so confusing, trying to mislead you- so ACCA has chance to comment again “read requirements, answer to the question”))
Anyway, I am waiting for my first fail)@seagoat said:
Wasnt this 100% Ratio D/E? so like 1/1 ? so its fifty fifty – this is how I understood this.WACC is based on E/(D+E) and D/(D+E), therefore, 1/2 is right.
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I tried to keep my report format in q1 as professional as possible and get 4 free marks and hope to get them lol ???
operating lease is recorded the same for each year…then, the total operating lease would be 40×4 years = 160m. in capital employed, we only add back the remaining balance of future lease payment. As 40m has already being paid, the balance would be 120m in capital employed. this is what i did. don’t know whether it is correct or not.
If the company has 100% gearing,it means it has no capital and so the WACC was going to be the cost of debt adjusted for tax only?surely this is wrong.
I used the 50:50 that they used in the calculation and stated my assumption.
Am I missing something..and practically speaking,is there a company that is 100% debt financed without its own capital?
@suhaybbeig22
I think not all 4 marks are for format. The marker is looking also for logical structure and flow so I imagine that 2 marks are for ‘format’ and 2 marks for you logical flow and structure.
Just guessing.
@wankhaidir said:
operating lease is recorded the same for each year…then, the total operating lease would be 40×4 years = 160m. in capital employed, we only add back the remaining balance of future lease payment. As 40m has already being paid, the balance would be 120m in capital employed. this is what i did. don’t know whether it is correct or not.Still not clear where amount of 115 in Capital Employed comes from?
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