CAP 2 SFMA ASSESSMENT 2010

barrystealover

Due diligiance

Adv/Disadv of cash consideration

Benefits of Mergers/Acquisitions

Facotrs to consider in making a dividend policy decision

Techniques to hedge against foreign currency risk

barrystealover

"Post it", what kind of question could you do with tranlational risk tho,u can only really define it.there are no techniques on the course to hedge against translational risk are there??

post_it

barrystealover wrote: »

"Post it", what kind of question could you do with tranlational risk tho,u can only really define it.there are no techniques on the course to hedge against translational risk are there??

There is only a small paragraph in the text so it prob something that you would throw in.

They have also disregarded the other 2 strategys in Ansoffs model maybe its worth considering these.

This is a fukin nightmare!!!

barrystealover

i wouldnt tink they will ask you about the other 2 possible strategies in ansoffs growth strategy as it doesnt really fall in to sfma does it??

i tink between what you have identified and i have identified there will surely be something there.

We could disect this for a year and still be coming up with possible questions so just try and identift the main 's and we'l be alright

C2theLahambert

I havent seen anyone with workings who calculated the theoretical share price after the rights issue in scenario 3,

I calculated as

current

5 shares @ 4.20 = 21
1 new issue (4.2 *.8)= 3.36
Total holding now = 24.36 for 6 shares
Value of 1 share = 24.36/6 =4.06

New K(e) (i didnt incorp growth as assuming its not paid immeadiately

((0.25(1.12))/4.06)+0.12
= 18.90

Total Mkt Value =2436000000...

The final WACC i calculated was 16.06

Anyone have something similar

hawai09

C2theLahambert wrote: »

I havent seen anyone with workings who calculated the theoretical share price after the rights issue in scenario 3,

I calculated as

current

5 shares @ 4.20 = 21
1 new issue (4.2 *.8)= 3.36
Total holding now = 24.36 for 6 shares
Value of 1 share = 24.36/6 =4.06

New K(e) (i didnt incorp growth as assuming its not paid immeadiately

((0.25(1.12))/4.06)+0.12
= 18.90

Total Mkt Value =2436000000...

The final WACC i calculated was 16.06

Anyone have something similar

yea i did this too but no one else seems to have i got 16.03% id say the difference is down to rounding

C2theLahambert

Similarly in Scen 2 and 3 i dont see why ppl are adding the growth rate,,

= 125 *1.12 = 140

Does this not infer that they are paying a div immeadiately....

Why would they do that or do you just have to assume they will pay it when calculating??

MAX72

C2theLahambert wrote: »

I havent seen anyone with workings who calculated the theoretical share price after the rights issue in scenario 3,

I calculated as

current

5 shares @ 4.20 = 21
1 new issue (4.2 *.8)= 3.36
Total holding now = 24.36 for 6 shares
Value of 1 share = 24.36/6 =4.06

New K(e) (i didnt incorp growth as assuming its not paid immeadiately

((0.25(1.12))/4.06)+0.12
= 18.90

Total Mkt Value =2436000000...

The final WACC i calculated was 16.06

Anyone have something similar

Where did you get the 0.25 from? The dividend was 125 but you now have 600 shares. If you are adjusting the MV, should you also adjust the number of shares. Cost of debt is then 17.75%....... or rather than doing dividend per share just use the totals ie (125(1.12)/2436)+.12

NIALL GAFFNEY

Hi Guys and Gals

I am like really stuck on this whole thing. The stress is so getting to me. Would any of you guys be up for a study session. I'm in the Bray area and would love to go through solutions. Maybe bounce some ideas of people. We could meet in McDonalds in Bray and go through some stuff.

Thanks

C2theLahambert

MAX72 wrote: »

Where did you get the 0.25 from? The dividend was 125 but you now have 600 shares. If you are adjusting the MV, should you also adjust the number of shares. Cost of debt is then 17.75%....... or rather than doing dividend per share just use the totals ie (125(1.12)/2436)+.12

I just used the current year dividend which was .25 or 25cent, Is this incorrect

post_it

C2theLahambert wrote: »

I just used the current year dividend which was .25 or 25cent, Is this incorrect

I trying to think about possible theory questions they might ask. Anyone got any ideas?

Have we even covered hedging or foreign exchange risk???

barrystealover

anything on cap1 and cap2 is examinable,but the things that stick out are

1.foreign currency rick
2.due diligiance
dividend policy
mergers acquisitions

Coldplayer

yeah anything on CAP1 and CAP2 is examinable but for the likes of due diligence there is feck all

i dislike this!

couple of attachements there guys on hedging and foreign currency....hopefull some of you will find it useful

does anyone have workings for each of the scenarios, still not sure how to do it so if anyone can help id appreciate it

barrystealover

i dislike this! wrote: »

couple of attachements there guys on hedging and foreign currency....hopefull some of you will find it useful

does anyone have workings for each of the scenarios, still not sure how to do it so if anyone can help id appreciate it

if you go back 1 or 2 pages some1 has answers in pdf format.i have the same workings and ans so im gona go with them.

Student85

Hi everybody, just to let ye know that a friend of mine was at a tutorial on this assignement and the tutor said that the answer to the relevant cost question is break even

TMB

Student85 wrote: »

Hi everybody, just to let ye know that a friend of mine was at a tutorial on this assignement and the tutor said that the answer to the relevant cost question is break even

Really someone told me that he said it was a loss of 16K?? Was anyone at it??

Archer26

A firm tutorial?? Did they give any workings?

Student85

i wasn't at it now, it was a frim tutorial in Dublin, what they said was the 16,000 for unskilled labour should not be included.

Archer26

I haven't included it but still have a gain of 8k....*sigh*

Student85

Attached it what they agreed in the tutorial.

Can anyone tell me if they got im really stuck

Scenario 2 15.22%
Scenario 3 15.05%

Archer26

Thanks! Were you told anything else helpful that hasn't been posted here yet?

Student85

No nothing that hasn't been said. Do you know anything about the WACC scenarios?

Archer26

I got the following, difference probably due to rounding??

Scenario 1: 14.28
Scenario 2: 15.27
Scenario 3: 15.15

Student85

Would you mind putting up the first scenario im a bit off with 14.19%?

ELLE163

aagh i am still so confused,
i still think it is might be -5000 rather than -25000 for mat fg. like in relation to the replacement material for another contract that COULD HAVE BEEN used and WOULD HAVE cost 5e per kg, i assume that the opportunity for this contract has expired as it COULD HAVE BEEN used at one point of time but not anymore therfore irrelevant.....

Anyone any thoughts????......

Student85

Can anyone tell me where i went wrong here. I believe the answer is 14.28%

Student85

ELLE163 wrote: »

aagh i am still so confused,
i still think it is might be -5000 rather than -25000 for mat fg. like in relation to the replacement material for another contract that COULD HAVE BEEN used and WOULD HAVE cost 5e per kg, i assume that the opportunity for this contract has expired as it COULD HAVE BEEN used at one point of time but not anymore therfore irrelevant.....

Anyone any thoughts????......

there are two possibilities for the quantity in stock. The material has realisable value oralternatively it oculd be used as a substitute for antoher material. the value to be included is the cost of the higher alternative which is the €25,000

ELLE163

I no im going on about this but i do understand what you are saying that the material has realisable value or alternatively it could be used as a substitute for another material. but your saying it "could be" a substitute however in the case study it states that it "could have been" and "would have cost" isn't this past tense ie that substitute is gone now for the proposed manufacture of the equipment ???

MAX72

Student85 wrote: »

Can anyone tell me where i went wrong here. I believe the answer is 14.28%

They purchase 600 million new debentures but pay off the exisiting 300 million. I have therefore in year o cash inflow 600 and and cash outflow of 300. I get a WACC of about 15.17