Hi,

 

I also found it a really tough paper and thought there was plenty on there that had not appeared in any previous exam papers.  With it being a massive syllabus I found that there were a few things I had forgotten or just did not know.

 

On top of that the budgeted question threw me a bit as a 25 marker as I was expecting a NPV & ABC question or a variance question (Reconcile to original profit etc)  This is where I spend most of my revision time so I worked through it as best as I could but not sure how well I did...... 

 

With regards to the high-low method you are talking about,  if I remember correct I did not use the 720,000 as there was a figure higher and lower than that in the information?  WHich is what I based my high-low calculation on.  It give me £550k fixed and £0.65p variable which I agree should come to 1018k, but as I did not use the 720,000 in the question I would not have noticed.

 

 

Hiya,

Just remembered. Yes I did use the 720,000 but it didn't work, then I realised there was a lower figure (680,000) I think. & I got £550,000 fixed cost & £0.65 variable.

Gosh, my heads a shed!!! lol

Hello,

 I thought the examiner worded things inthe budgeting section awfully to confuse people.

Q4 NPV, not sure if future investments year 1,2 and 3 should have been in or not, I pu them in but then got negative NPV, which though me thinking it was wrong.

What did everyone else think?

 

I know a made a few booboos here and ran out of time, not sure if passed or not. 

It was quite a tough paper but seeing that Melita got a VC of 65p helps as that's what I got.  But I was expecting a full operating statement (hoping for aborption costsing) which you can get some easy marks with prices variances etc but no luck...  That question really threw me on the reading time!

NPV was ok but I got a really weird figure for my IRR? And the Section B question about export financing was totally unexpected, def lost my 5 marks there.

Really don't know how to guage how I've done, so happy to get drunk as a skunk tonight and forget about it until July!

Yeah me to Kim, off to the pub at 4pm to get lashed!!!! LOL

Hi Lynne,

 

I included the development exps etc in years 1,2 and 3 but ignored the 350k or so it mentioned for research budget.

 

I had positive cashflows each year except for the final year due to reduction in sales and lower sales price as it had reduced by 20% cumulative per year (That's how I read it!)

I added back on the tax from losses so treated it the same as capital expenditure and added it back to the profit.

 Think I ended up with about 100 NPV which seems really high so not sure if that is correct as I was rushing!

Based on that I got IRR to around 19% odd........

I've Probably done it all wrong though as was time pressured and panicking!!!

Chris 

 

Ha ha, I have booked the day off so I can nurse my hangover all day LOL. Good luck with your reulst too!

 

I ignored depreciation in a cashflow sense and just used the tax depreciation each year of 25% Reducing balance to calcluate 30% of that for the Capital allowance that was split over two years.

 

Then added back on the 100 on disposal after I had calculated tax so that it got discounted but not included in tax calc.

 

 

 

Fixed overheads it said excluded depreciation so there you did not have to do anything with depreciation besides from calculate allowances for tax.

 

Thanks Chris,

 I did the same added in the further investments and then allowed tax depn savings on them too.

R&D I classed as a sunk cost so just put one liner in saying why ignored.

Yeah I sound simular for year one negative and then positive thereafter, but somehow got I thin (435) NPV overally, not sure where I went wrong, maybe I just made a calculation error lets hope.

Good Luck all  

 

Neil,

 

If it's any consolation your IRR figure seems a lot more realistic than mine.   MY NPV was over 100 which seems like a lot......... What was your NPV?

Did you also reduce sales price cumulately like 20% of the previous year rather than 20%, 40%, 60% off year 1?

 

Thanks

 

 

hi chris,

 cant remember the npv figure exactly, - maybe around 60-65

yeh, i reduced the sales from year 1 onwards.

i had re read that npv question as it said the 4G operations will close at end of year 1. tge opportunity loss ends there. after that the revenue is purley from 5g operations (yr2 -5). not just if i interpreted the Q right lol

i put the marketing and development costs down as Working capital,
my logic being is that they are relevant costs in the future. whereas the R&D of 300m was a sunk cost. already happened so ignore it.

dam cima - they make this such a MASSIVE syallbus. they need to cut some slack.

Yeah completely agree, there is just WAY TOO MUCH on the syllabus.I learn one part of it & really get it but when I move onto something else I seem 2 forget all the bits I have learnt. I don't think there's enough room in my head!!! pmsl :o)

hi all,

i'm very concerned about q3 - all i spoke to after exam calculated variances in the traditional sense - i just flexed the budget as that's all i thought it wanted. did anyone else do this?

 

i actually found q4 surprisingly nice, although on reflection probably should've used the real rate rather than the 8 percent given. oh well all over now!! i got a positive npv of 122.something, irr of 15.2 and payback period of 1 year 9 - 10 months.

do the answers come out before results as this is going to drive me mad until then. i ende 

 

I don't feel like I am ever going to pass it Neil. Today is the 4th time I have taken it. I have previously got 41%, 43% & 46% so I was really hoping with the extra work I have put in that I could finally scrape over 50% but after today I feel I will be lucky to get flipping 30%!!!!!!! Not good! I hate CIMA lol ;o)

 

[/quote] Yeah completely agree, there is just WAY TOO MUCH on the syllabus.I learn one part of it & really get it but when I move onto something else I seem 2 forget all the bits I have learnt. I don't think there's enough room in my head!!! pmsl :o) [/quote]

 

Hi Neil,

 When you say working capital for marketing and development costs.  Do you mean that you had the funds returning at the end of the project or that you treated them as a expense?

 I treated them as an expense and I also discounted the first years sales by 200 (i think ) for the reduction in contribution from 4G but left the rest the same.

 Regards

Chris