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I still remember the main data from that equity beta question.
Engineering – 25% debt/equity ratio.
Industrial – 1.36 equity beta & 50% debt/equity ratio.I couldn’t get a proper answer, so went with 1.17 or 1.7 (whatever the one with seven was)
Yeah I just followed the lecture note.
I first ingress the project beta 100/50+50(1-T) x 1.36
100/140x 1.36 = 0.97
100/100+25(1-t)
100/120=0.833
0.97/0.833. 1.17
I’m wondering if your paper was different from mine. I had a beta equity question in section A which said that one of the businesses was financed all by equity. Therefore no debt? I can’t remember it well though.
The exam went horrible wrong and I have no hopes of passing at all.
Can anyone shed some light on Work out the net benefit of the company changing its working capital financing policy from fluctuating to permanent assets. It was given the average working capital and the minimum and they wanted to know the cost and short term finance needed. Had no idea what to do at all. Average capital 12.5 m and minimum 4.75 m I believe. Can anybody help? I think I didn’t get one single mark on this question. I am so deflated right now!!!Did anyone get 2 questions from convertables?
1) it was about redemption yield 7% and calculate conversion premium
2) they gave floor value of around 112 and asked for minimum value
as far as i remember they dint give any cost of debt.
Does anyone know the answer or how its done?
I just realized, I kept using the gearing ratio formula (debt/debt + equity), hence why I thought 50% debt/equity ratio (likewise for 25%) elaborated to 50 for debt and 50 for equity, still giving 50% ratio. Which is why I could not come to a conclusion.
I went with $4.5 for conversion premium, I got $124.5 for mv of loan note and $120 for share value. Info I recall; 9.5% convertible loan notes, 7% rate something (took this as discount factor), 20 shares for one loan note with market share price being $6 and redeemable after 5 years. Nominal value of loan note was not directly given so assumed it to be $100.
Conversion premium = mv of the convertible loan note – mv of the 20 shares (20x$6)
For the mv of convertible loan note part, the present value of loan note on redemption is $71.3 (100 x .713) since it was said to be redeemable at nominal value and present value of mv of the 20 shares conversion is $85.56 (120 x .713), choosing the higher return option which is $85.56 (conversion instead of redemption) and adding it with the present value of the interest payments for 5 years $38.95 (9.5 x 4.100).
The above gives mv of the convertible loan note as $124.5.I may be wrong, what are your thoughts?
Had in C section 1) NPV calculation with inflations and probabilities; 2) Gearing + Interest cover ratio (with around 50% theory (discuss/explain) marks). Can’t say C was too hard , however i did not manage to complete all theory questions.
Section A felt easy (but that might be a bad sign xD).
Section B took all energy from me. I had issues with:
1) FRA/ MMH (was not mine well-prepared topic), and
2) the most crazy for me was the question on Ordering and Holdings costs despite the fact I was confident in this topic. The wording in cases was very tricky. I am sure i correctly calculated Total Holding costs, but i was lost on Total ordering costs. If anyone remember and could explain the intended logic hidden in the text, please respond to me. Only i remember the ordering cost of $300 per order the size and the order size did not matter.Hey Vicosta,
In my reply to this thread, (I think it might be the 5th one from the top on page 1) I wrote down all my impressions about that question and how I tackled it.
Hope it helps?Exam was not ideal, didn’t get a WACC Or NPV question in section C.
So from what I can remember for section C I put the following.
1. For the things the company needed to consider before taking the bulk discount I said
A) the financial risks of liquidity shortages from fronting more money for orders and holding costs and that the working capital cycle would be lengthened because of there being more inventory held.B) Business risks taken from the day to day operations changing and what the impact of this would be, is there enough extra storage space available.
Not sure if these were right or not, was a hard question to answer and only 4 marks I believe!
2. There was a question about ST financing which was 5 marks, I winged it and tried to use the spread equation which I hadn’t practised at all! I don’t even know if this is the right approach.
3. Then there was a 6 mark question about why Discount Cash Flows are better than Non-discount cash flows, I put 3 points for this and tried to explain why they are beneficial:
1. Time Value of money
2. Compatibility
3. Sensitivity analysisI have no idea how I’ve done, would be great if someone can let me know what they got for these questions because it seems like hardly anyone got them and they were unlike any section C’s I’ve come across after doing about 8 mock exams…
Like most people here, in C section I got the bulk discount question which was pretty straight forward and then I got EAC for machine 1 three years and machine 2 five years, section C and got the question on why DCF methods are superior to non DCF method .. and in the middle there was question about how company should manage it cash balance and it was like I never seen this question before although I cover all the syllabus in BPP books
Section C was fine, but A and were just nasty man…
Section A was mostly theory I think the easiest questions were about money market and macroeconomics.
Section B .. fist question was about hedging the other two i cant even remember .. if someone can remind me i will be thankful .. the wording of the question was very confusing
this is my resit and i came prepared .. but with all the these section A and B question i don’t know man .. it was too much really
Guys, I’ve accidentally selected the rebook option. What should I do now? Now I am at the payment stage. But there’s a message says if we don’t pay for the rebooking transaction, then our original attempt will be marked.
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AG1999 wrote:Guys, I’ve accidentally selected the rebook option. What should I do now? Now I am at the payment stage. But there’s a message says if we don’t pay for the rebooking transaction, then our original attempt will be marked.
Sorry (Then my original attempt will be marked)
Very tough exam! Section C’s were investment appraisal and then Gearing / Interest cover. These were ok but multiple choice both section A &B killed me!
I done so many practice questions & mock exams and did not feel the exam reflected the level of difficulty.
Need a miracle to scrap 50% but will probably have to retake.
Did anyone got this question regarding green policies legislation?
Options that I remember is
A. Environmental Pressures groups
b. Carbon Tax
C. Can’t remember
D. River pollutionI got this as a first question in Sec A
AG1999 wrote:Guys, I’ve accidentally selected the rebook option. What should I do now? Now I am at the payment stage. But there’s a message says if we don’t pay for the rebooking transaction, then our original attempt will be marked.
Contact: Students@accaglobal.com
AG1999 wrote:Did anyone got this question regarding green policies legislation?
Yes i did c and d … I think c was about green house gases
This was also a repeat for me having failed on 48% in June, I thought this was an awful paper, section C no WACC at all in any section of the paper, you would at least have expected it to come up as a 10-mark question if it didn’t come up in section C. It nearly like they want you to have to repeat. Section A and B I agree with most that half of the questions didn’t even know what they were looking for. Spent more time trying to understand the question than answering. And although I did quite a bit on hedging the question asked was so confusing for 2 marks. I feel I have probably done worse in the one that the June one. Very disappointed overall. Not sure if I will repeat again. Thats how I feel today.
hotteto wrote:I got it.
I assume it was the IT retailer.. no?I did IT retailer too but when I got home so I think and maybe supermarket is the best choice. Retailer is known for its cash on counter sale so it is next to possible for credit sale for him.
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same here. spent so much time trying to understand the question, failed June exam with 49.and was so confused with the question about short term long term finance and fluctuating current assets.
PRISCILLA NKHWAZI wrote:same here. spent so much time trying to understand the question, failed June exam with 49.and was so confused with the question about short term long term finance and fluctuating current assets.
Same here. Failed with 49 marks in June exam. The difficulty of this exam remainds me of my FR exam which i took in march 2020 in a hot exam centre.
Same thing.
I think I did Sec A too quickly that I have messed it.
Sec B was fine
Sec C was fine (not sure)
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