• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
Free ACCA & CIMA online courses from OpenTuition

Free ACCA & CIMA online courses from OpenTuition

Free Notes, Lectures, Tests and Forums for ACCA and CIMA exams

  • ACCA
  • CIMA
  • FIA
  • OBU
  • Books
  • Forums
  • Ask AI
  • Search
  • Register
  • Login
  • ACCA Forums
  • Ask ACCA Tutor
  • CIMA Forums
  • Ask CIMA Tutor
  • FIA
  • OBU
  • Buy/Sell Books
  • All Forums
  • Latest Topics

June 2025 ACCA Exams

How was your exam? Comments & Instant poll >>

20% off ACCA & CIMA Books

OpenTuition recommends the new interactive BPP books for September 2025 exams.
Get your discount code >>

Sept/ december 2019 okan co

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › Sept/ december 2019 okan co

  • This topic has 3 replies, 3 voices, and was last updated 5 years ago by John Moffat.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • January 28, 2020 at 10:05 am #560036
    rimshy
    Member
    • Topics: 95
    • Replies: 91
    • ☆☆

    In qs 1 i have doubt in theoretical part where they have asked for evaluation amd justification..i cannot understand the points given as project alpha expected to yield a small amount in excess to yield expected from project beta …what does it mean by yield of project
    And why project beta duration is lower than project alpha and why project beta risk is lower than project alpha..
    Moreover..it is assumed that given discount rate reflects the business risk …but in the question we are given cost of capital how does this reflects the business risk …and what reflects business risk as in APV WE uses ke as discount factor ?

    January 28, 2020 at 1:21 pm #560066
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54679
    • ☆☆☆☆☆

    Yield can mean several things depending on the context. In the examiners answer it is simply referring to the NPV’s and APV’s – they are similar but Alpha’s are a small amount in excess of Beta’s (and so if this were the only thing to be taken into account then Alpha would just be better).

    I assume that you are happy with the calculation of the duration for Project Alpha (it is all explained in my lectures). It is 3.04 years and for Project Beta it is given in the question as being 2.43 years.
    Therefore it is lower for Beta than it is for Alpha!
    The question specifically says that the risk is to be measured by the project duration and so Beta has less risk than Alpha (the lower the duration the lower the risk, in the same way as we use the payback period in earlier exams).

    The WACC is affected by both the business risk and the level of gearing. However the question does not give the WACC. It says that ‘the cost of capital for appraising the base case net present value of Project Alpha is 10%’. For APV this is the cost of equity if the project were financed entirely by equity and therefore is only affected by the business risk of the project.

    March 1, 2020 at 6:13 pm #563664
    dimitri82
    Participant
    • Topics: 4
    • Replies: 4
    • ☆

    One more question concerning Okan:

    Examiner, in his answer, calculated the annual tax shield based on net borrowed amt required – 2.1% x Y$ 24,538,000 x 20%.

    I would assume the 3% issue costs are to be borrowed and interest accrued on the gross loan amt like this – 2.1% x Y$ 24,538,000/0.97 x 20%.

    According to marking scheme, this is one mark, would I earn it?

    thank you in advance

    March 2, 2020 at 6:55 am #563681
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54679
    • ☆☆☆☆☆

    Probably yes 🙂

  • Author
    Posts
Viewing 4 posts - 1 through 4 (of 4 total)
  • The topic ‘Sept/ december 2019 okan co’ is closed to new replies.

Primary Sidebar

Donate
If you have benefited from our materials, please donate

ACCA News:

ACCA My Exam Performance for non-variant

Applied Skills exams is available NOW

ACCA Options:  “Read the Mind of the Marker” articles

Subscribe to ACCA’s Student Accountant Direct

ACCA CBE 2025 Exams

How was your exam, and what was the exam result?

BT CBE exam was.. | MA CBE exam was..
FA CBE exam was.. | LW CBE exam was..

Donate

If you have benefited from OpenTuition please donate.

PQ Magazine

Latest Comments

  • mm3677 on IAS 16 Accounting for a revaluation – CIMA F1 Financial Reporting
  • Anastesia123 on MA Chapter 1 Questions Accounting for Management
  • John Moffat on MA Chapter 26 Questions Variance Analysis
  • acowtant on Changes in group structure – examples – ACCA SBR lectures
  • Samantha96 on The Statement of Financial Position and Income Statement (part a) – ACCA Financial Accounting (FA) lectures

Copyright © 2025 · Support · Contact · Advertising · OpenLicense · About · Sitemap · Comments · Log in