[jtaylor]

Investment

The company is considering an investment

Diversification

The investment is a diversification from its current activity

The company would need to raise additional debt finance for the investment

Subsidised loan

Because the investment is an area that is of interest to the government, it is willing to offer the company a subsidised loan, which will be less than the market rate

Reference to issue cost
Remember that your cost of capital to discount the cash flows from the investment phase is the ungeeared cost of equity

In other words you need to derive ba which you will need to plug into your capm formula

Dont forget to adjust your base case NPV for the effects of the financing method

Best of luck in your exam

[jtaylor]

My advice:

Keep your Kaplan study text and revision kit

Buy BPP study text and revision kit

Use them side by side, using BPP as the lead text.

Do the questions at the end of each chapter(BPP)

Do the test your understanding questions (KAPLAN)

Do as many questions in the revision kits(BPP/KAPLAN)

I used this strategy and it worked for me. ie well over 60 percent

Best of luck

[jtaylor]

Buy F9 textbook and revision kit from BPP . If you go through them and you are happy, then go ahead and do P4, otherwise, you may have to stick with P5.

P5 is easier to understand, but with the current examiner, I often find his requirements vague and sometimes ambiguous.

Yes P4 is a difficult subject, BUT with the current examiner, most requirements in the exam are often straight forward, you either know what to do or you don’t. I abandoned P5 for P4 and thank God I am now an affiliate.

Best of luck

[jtaylor]

Both subjects are demanding. Having said that, i think p5 is much easier to understand, however, from my experience it is more difficult to pass. I abandoned p5 for p4 because i found the requirements too difficult to understand. While p4 is more difficult than p5, the requirements are often more straightforward. Best of luck

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