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50 marks, Base case NPV was positive with me.
The question with 5% uplift, I decided to not inflate for good ot bad.

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Can somebody tell me how was the correct answer about the issues by separating a treasury department?

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Can somebody tell me how was the correct answer about the issues by separating a treasury department?

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@ Elliot I got mostly the same results. I have calculated cost synergy by multiplying 27m on P/E 12. Calculated also another revenue synergy from 10% increase in P/E. Total synergy was approximately 1167 m of value. Final results 56% in value and 137% for EPS, 4+/- for Mortexa. 3,6 was the estimate price for Yekkon and 13,2 new PE.

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@maria9186

10 points for pre- acquisition figures
10 points for post – acquisition
5 points for authority

@ can you please share your thoughts about the student tasks in question 3 (particularly the one with forward to hedge unhedged exposure from option – I think, it is not possible, because don’t know which direction the underlying security price will move), and how according to you will be split the points from the first part of hedge question.

Probably:

5 points for collar
4 points futures
4 points basis
2 points advise which one is best

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You were supposed to use “Cost of Goods sold” or Cost of Sales(For WIP and Finished) in —other words for the Working Capital Question.

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So, do you mean “Cost of goods Sold” and ” Cost of Sales” is the same figure for the question?

This does not help me a lot, because I have calculated 60% markup instead of margin and used the wrong base for Finished goods and WIP days. Probably, this stupid mistake will cost my head on that exam.

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The answer to the working capital cycle is indeed 73 days and the purchases weren’t a distraction it had to be used for calculating the payable days and also for the 6 marker analysis question that followed it.

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Isn’t it for 3 marks?

1) Cash operating cycle – 6 marks
2) Analysis of how to reduce the Cash operating cycle – 3 marks
3) Miller – Orr – 5 marks
4) Cash Management motives – 6 marks.

Finally, can you tell me what base used for the calculation of the material days? I used the figure given in the question, so payables and material days were calculated with the same base.

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Regarding Section C – Cash Operating cycle, I used the cost of sales to calculate WIP and Finished goods, but I think should have used the cost of goods. Can you remind me if it was mentioned that the Material purchased on credit was 90% of the production costs?

Regarding Section C NPV calculation for a project (not the PI) – It was said to ignore the tax (corporate tax and tax allowable deprecation)?

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Additionally, what do you think about the inflated fixed costs of 35,000 in Section C (NPV calculation)? Was it for the project life or should be taken per year (5 * 35,000).

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Thank you Kish for the NPV not tax answer – makes me happy.

What about the Cash Operating Cycle – Do you remember WIP and Finished Goods? How did you calculate them?

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Pecking Order Theory. I believe –

1) Retained earnings
2 Bank Loan
3) Stock Loans
4) Equity

I was surprised by the presence of Bank Loans but decided that Bank Loans are shorter than Bonds and cheaper which will reduce the WACC.

Am I right?

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Yeah, I had the same question and this is the exact order I put so hopefully it’s right! pretty sure equity is the lowest in terms of financing while retained earnings & loans were further up the chain due to their lower costs.

Feeling grateful I missed that sensitivity analysis 20-mark question some people had. sounds ridiculously tricky. For section C I got a mixture of working capital management (Cash Operating cycle/Miller Orr & Discussion on trade receivables & NPV/investment apprasial+capital rationing.

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Regarding Section C – Cash Operating cycle, I used the cost of sales to calculate WIP and Finished goods, but I think should have used the cost of goods. Can you remind me if it was mentioned that the Material purchased on credit was 90% of the production costs?

Regarding Section C NPV calculation for a project (not the PI) – It was said to ignore the tax (corporate tax and tax allowable deprecation)?

[SAS1SOF]

Pecking Order Theory. I believe –

1) Retained earnings
2 Bank Loan
3) Stock Loans
4) Equity

I was surprised by the presence of Bank Loans but decided that Bank Loans are shorter than Bonds and cheaper which will reduce the WACC.

Am I right?

[SAS1SOF]

Sycamore question was not so difficult for me, but Section B, 2 out of 3 were awful. I have completed everything, but unfortunately have my concerns. Is there any possibility somebody here to post the questions from the exam as George did it?

Thanks!!

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