NOTE FACEBOOK (F3)

SEPT 2014 QUESTION 4

1. This Q deals with 1) the usage of fisher model/formula (given in
the appendices) and 2) decision to choose project(s) within
limited capital (or rationing)---using PI and NPV
2. Jika Malaysia naikkan interest rate, tapi US kekalkan interest
rate, maka secara teori nilai wang RM berbanding USD akan
semakin lemah (kalau naik sama2 tak pa..:))
3. don't worry too much about today's exercise. it is international
finance (with forex)...everybody falls the first time on bicycle. u'll
get better!
4. spot rate=tukaran wang hari ini, future rate= tukaran wang
hadapan (fisher formula untuk tempoh setahun akan
datang@360 hari)
5. kalau cash flow sama sahaja nilai untuk beberapa period, guna
cumulative table untuk > cepat!

NPV
1.how many years involved?
2.is there residual value?
3. tax effect (usually posted in future period, usually first period has no
tax deduction, and one year after final year will have tax deduction)
4. forex (observe the given spot rate, sometimes the spot rate changes
year to year at a fixed rate e.g. 2% increase, you need to adjust)
5. fisher formula to be used to calc for future rate if point no. 4 is
absent.
6. payback= initial cost/NPV
7. Profitability index (PI)= NPV/initial cost
8. be sure to be familiar with IRR too
9. be sure to be familiar with APV too
You still have time, you can ask me during revision later...

.QUESTION 3 SEPT 2010

FOCUS ON 2013/2014. Pay attention to terp, apv, adjusted

wacc, biz valuation.

 TIPS 1:
This is obvious. Whenever F3 asks you about "financial impacts"
or discuss whatever financing options...always include points on
1. gearing
2. profitability
And if it involves international setting
3. Forex
4. Tax
5. Inflation
Add PEST if the question asks for other impacts as well. If
possible, add Porter 5 forces (the examiner loves this Porter guy)
Tips 2:
Always have shareholders' wealth in mind. There is no point
to finance a project or take over a business if you can't pay
dividends or increase share price.
New firms can afford not to pay dividends in the first few
years but not for established firms. That is why dividend
policy is important.
Tips 3:
under F3, we learn when to invest (+ NPV) and also, not to
forget, when to exit (investment control: abandon, wait,
continue). In real life, some people learn when to invest in
good times but are still in the dark about when to cut losses.
Forget about the sunk costs! know when to get out...

 MARGINAL COST OF CAPITAL = WACC ASAL ADJSTED

WACC
Marginal COC = 10% - 11% = 1%
Tip 4:
Kalau soalan ada book value dan mkt value untuk equity dan debt.
Guna yg mana untuk kira Ke dan Kd?
Pasti guna mkt value! (Shareholder's wealth mesti harga pasaran,
tak rocklah harga nilai buku)
Trick: kalau dia bagi balance sheet dan ada beri maklumat share
price...pastikan kira dulu mkt value untuk equity dan debt,jika
berkaitan! Baru kira cost of capital.

Kalau ada preference share, jgn lupa untuk kira Kps...jd kiraan
wacc ada Ke, Kd,Kps beserta weight/portion masing2...

Soalan : Sir..utk soaln final 1st sem 2013/2014..mcm mna nak kira
market value utk Q1?? @mohd atef
Jwpn : Jgn tolak (1-t) masa kira portion debt wacc. Kita tolak (1-t)
masa ungear beta dan kiraan Kd = i x (1-t) shj...kotlah terlebih
rajin... atau masa kira apv...
Tips 5 ( tips aff suzuki):
Tau tak cara nak dpt ytm untuk bond? Kotlah company ada terbit
bond, maka Kd untuk bond kena pakai ytm...
Biasanya...soalan guna bond at discount price@ bond price < nilai
par...

 Tips 6 :
Rights...terp...?
First, we should know by now that rights issuance is to get more
money from existing shareholders ( you usually needs several
rights to buy one new share). Company needs money to finance
new projects, or pay some debts or for working capital (or
combination of these).
It is up to shareholders to (within expiry period e.g. two weeks)
1. exercise (buy) the rights,
2. sell it (to existing or new shareholders) or
3. Ignore
Rights will almost always issued at discount (e.g. 20% from mkt
price of a share)
Just use the terp formula at the back of exam question. What is
terp? It is the theoretical price after the expiry date of rights
exercise and it is almost always lower than mkt price.
Right price < terp< current mkt price!
Ask me about rights if you have one...

**Ex = after; Cum=before . Same with ex right/cum right

**Ex div price...harga selepas div dibayar...cum div price...harga
sebelum dividen dibayar.