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CAP 2 SFMA ASSESSMENT 2010

1246711

Comments

  • Closed Accounts Posts: 17 ✭✭✭ BlackHouse


    I got the following:

    Material CX = +10,000
    Material FG = -25,000 Replacement cost agreed
    Material NF = -170,000 Replacement cost agreed
    Skilled Labout = 0 As it is idle if project does not go ahead agreed
    Unskilled Labour = 76,000 (400*40 + 400*150) agreed
    Variable O/H's 12,000 Relevant as they are incremental agreed
    Fixed OH's = 18,000 stepped cost agreed
    Estimation costs = 0 Sunk cost agreed
    Engineering fees = 25,000 agreed
    Head Office = 0[/quote] agreed

    You have the 10k in the wrong way around, loos shoul dbe 16k not 36k.


  • Closed Accounts Posts: 17 ✭✭✭ BlackHouse


    accounts10 wrote: »
    i have just been working on the relevant costing section.. just wondering did anyone get a loss of 16,000?


    I got that, have posted my workings.


  • Closed Accounts Posts: 44 ✭✭✭ MAX72


    BlackHouse wrote: »
    I got the following:

    Material CX = +10,000
    Material FG = -25,000 Replacement cost agreed
    Material NF = -170,000 Replacement cost agreed
    Skilled Labout = 0 As it is idle if project does not go ahead agreed
    Unskilled Labour = 76,000 (400*40 + 400*150) agreed
    Variable O/H's 12,000 Relevant as they are incremental agreed
    Fixed OH's = 18,000 stepped cost agreed
    Estimation costs = 0 Sunk cost agreed
    Engineering fees = 25,000 agreed
    Head Office = 0
    agreed

    You have the 10k in the wrong way around, loos shoul dbe 16k not 36k.[/quote]

    The only one I have a question mark on is the unskilled labour. I agree with the opportunity cost of €60k but would you still charge the cost of the unskilled labour. If the project does not go ahead, will that cost not be incurred by the other project. Just like the skilled labour, the unskilled labour cost will be incurred whether this project goes ahead or not. I am at a break even situation!!


  • Closed Accounts Posts: 17 ✭✭✭ BlackHouse


    MAX72 wrote: »
    agreed

    You have the 10k in the wrong way around, loos shoul dbe 16k not 36k.

    The only one I have a question mark on is the unskilled labour. I agree with the opportunity cost of €60k but would you still charge the cost of the unskilled labour. If the project does not go ahead, will that cost not be incurred by the other project. Just like the skilled labour, the unskilled labour cost will be incurred whether this project goes ahead or not. I am at a break even situation!![/quote]

    So you are saying that unskilled of €40 per hour would be used for the other job if we don't go ahead, therefore is a cost that the company will incurr anway?
    so its only the contribution forgone of 150 per hour that needs to be included???


  • Closed Accounts Posts: 44 ✭✭✭ MAX72


    BlackHouse wrote: »
    The only one I have a question mark on is the unskilled labour. I agree with the opportunity cost of €60k but would you still charge the cost of the unskilled labour. If the project does not go ahead, will that cost not be incurred by the other project. Just like the skilled labour, the unskilled labour cost will be incurred whether this project goes ahead or not. I am at a break even situation!!

    So you are saying that unskilled of €40 per hour would be used for the other job if we don't go ahead, therefore is a cost that the company will incurr anway?
    so its only the contribution forgone of 150 per hour that needs to be included???[/quote]

    Thats how I was reading it but now I am not so sure!!..... everyone here seems to be including the €16k unskilled labour cost. Will have to check it out before the 16th!!


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  • Closed Accounts Posts: 2 Will Mckenzie


    susie-q wrote: »
    Looking back on my college notes I have relevant cost of materials will be the greater of alternative use value or the net realisable value. So for the case of FG would this not be the greater of scrap value €1 and replacement value €5.?
    i.e. 5000 kg x €5 = €25000??

    Is the replacement cost not gone already? They could be trying to catch us out with wording?


  • Closed Accounts Posts: 2 Will Mckenzie


    MAX72 wrote: »
    So you are saying that unskilled of €40 per hour would be used for the other job if we don't go ahead, therefore is a cost that the company will incurr anway?
    so its only the contribution forgone of 150 per hour that needs to be included???

    Thats how I was reading it but now I am not so sure!!..... everyone here seems to be including the €16k unskilled labour cost. Will have to check it out before the 16th!![/quote]

    I think it is only the 150 per hour needed. The 40 per hour would be used anyway. Thats how I read it anyway.

    This would mean unskilled labour is 60,000


  • Registered Users Posts: 5 ✭✭✭ accounts10


    MAX72 wrote: »
    So you are saying that unskilled of €40 per hour would be used for the other job if we don't go ahead, therefore is a cost that the company will incurr anway?
    so its only the contribution forgone of 150 per hour that needs to be included???

    Thats how I was reading it but now I am not so sure!!..... everyone here seems to be including the €16k unskilled labour cost. Will have to check it out before the 16th!![/quote]

    Yeah i was unsure about including the unskilled labour as well. i had originally only included the contribution forgone. but then saw everyone here saying they were including it.
    also, i wasnt sure about the variable overhead cost. would you include the variable overhead element for skilled labour (200 hrs x 20) as they have idle time so would it not be incurred regardless of whether you take on the job or not??


  • Closed Accounts Posts: 11 ✭✭✭ flashtash


    MAX72 wrote: »
    The debentures raise the exact amount. They raise 600million but would have to pay off the outstanding 300 million. The rights issue raises 336 million.

    yeah, i agree with that


  • Closed Accounts Posts: 44 ✭✭✭ MAX72


    MAX72 wrote: »
    So you are saying that unskilled of €40 per hour would be used for the other job if we don't go ahead, therefore is a cost that the company will incurr anway?
    so its only the contribution forgone of 150 per hour that needs to be included???

    Thats how I was reading it but now I am not so sure!!..... everyone here seems to be including the €16k unskilled labour cost. Will have to check it out before the 16th!![/quote]


    Checked this out last night. The €16k labour charge is also included giving a cost of €76k. Overall loss of €16k.


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  • Registered Users Posts: 10 ✭✭✭ eomahoney2000


    ava 10 wrote: »
    got pretty much the same answer for wacc on debentures..just a bit confused tho with the year zero if its 2009 or 2010 and the market value of debentures nt sure if its 100 r has interest 2be subtracted etc..

    I was just wonderin wat is the purpose of calculating wacc for each of these three situations... I mite sound stupid askin as i do not understand how ye know if they raise the necessary 300 mill required


  • Closed Accounts Posts: 1 Mark McDermott


    OMG GUYS, THIS SFMA ASSESSMENT IS LIKE SOOOO STRESSFULL!!!:eek::eek::eek:

    I've spent my entire Christmas Holidays trying to work out the alternative WACC calculations for the 3 sources of finance so I hope they're correct;

    Scenario 1: 14.28%
    Scenario 2: 15.23%
    Scenario 3: 15.19%

    Can anybody agree these??

    Over and out


  • Closed Accounts Posts: 3 ava 10


    OMG GUYS, THIS SFMA ASSESSMENT IS LIKE SOOOO STRESSFULL!!!:eek::eek::eek:

    I've spent my entire Christmas Holidays trying to work out the alternative WACC calculations for the 3 sources of finance so I hope they're correct;

    Scenario 1: 14.28%
    Scenario 2: 15.23%
    Scenario 3: 15.19%

    Can anybody agree these??


    Over and out

    can i ask how ur calculating redeem debentures???


  • Closed Accounts Posts: 44 ✭✭✭ MAX72


    OMG GUYS, THIS SFMA ASSESSMENT IS LIKE SOOOO STRESSFULL!!!:eek::eek::eek:

    I've spent my entire Christmas Holidays trying to work out the alternative WACC calculations for the 3 sources of finance so I hope they're correct;

    Scenario 1: 14.28%
    Scenario 2: 15.23%
    Scenario 3: 15.19%

    Can anybody agree these??

    Over and out

    Got the exact same figures myself......


  • Registered Users Posts: 96 ✭✭✭ Vaioer


    One point

    - On Page 1 it states that the dividend has been paid to ordinary shareholders(€125M) but that the dividend has not been paid to preference shareholder yet.

    Surely preference shareholders have to be paid first and therefore another €12m has to be factored in for the payment to them.


  • Closed Accounts Posts: 44 ✭✭✭ MAX72


    Vaioer wrote: »
    One point

    - On Page 1 it states that the dividend has been paid to ordinary shareholders(€125M) but that the dividend has not been paid to preference shareholder yet.

    Surely preference shareholders have to be paid first and therefore another €12m has to be factored in for the payment to them.

    I do not think that has any affect on the WACC. Shares are trading cum dividend so just back it out.

    The divident payment has already been accrued for in the P&L

    See finance cost 91 - 8% Irredeemable 40
    13% Redeemable 39
    6% Pref 12

    Total 91

    Anyone else an opinion on this............
    So it has been accounted for in the P&L, just not paid over.......


  • Registered Users Posts: 2 mcloum22


    ava 10 wrote: »
    got pretty much the same answer for wacc on debentures..just a bit confused tho with the year zero if its 2009 or 2010 and the market value of debentures nt sure if its 100 r has interest 2be subtracted etc..


    Hi, Could someone please tell me how ye got the 100m??


  • Closed Accounts Posts: 14 ✭✭✭ TMB


    My WACC for the three financing scenarios

    S1. 14.27%
    S2. 15.20%
    S3. 15.16%

    Anyone get close to these as i'm not sure. For S1 I said the loan is over a 21 year period, is that right?


  • Closed Accounts Posts: 1 5378


    MAX72 wrote: »
    I do not think that has any affect on the WACC. Shares are trading cum dividend so just back it out.

    The divident payment has already been accrued for in the P&L

    See finance cost 91 - 8% Irredeemable 40
    13% Redeemable 39
    6% Pref 12

    Total 91

    Anyone else an opinion on this............
    So it has been accounted for in the P&L, just not paid over.......

    I agree, all the interest expenses have been provided for in the pl and bs


  • Closed Accounts Posts: 5 ✭✭✭ Student_123


    I think everybody has the right answer to the relevant costing bar the skilled and unskilled labour!! It's either skilled is either 12 or 0, and unskilled is either 60 or 76, so if you could throw down what you tink and we can get a final answer for everyone ya???


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  • Registered Users Posts: 58 ✭✭✭ barrystealover


    OMG GUYS, THIS SFMA ASSESSMENT IS LIKE SOOOO STRESSFULL!!!:eek::eek::eek:

    I've spent my entire Christmas Holidays trying to work out the alternative WACC calculations for the 3 sources of finance so I hope they're correct;

    Scenario 1: 14.28%
    Scenario 2: 15.23%
    Scenario 3: 15.19%

    Can anybody agree these??



    Over and out


    mark

    for scenario 1 i got 14.25% so ireckon our difference is just down to rounding.

    for scenario 2 i got 15.13%.if possible could you publish ur calculations so we could compare?

    scenario 3 i am very rusty on so any help would be greatly appreciated


  • Closed Accounts Posts: 1 Underpaid_ACA


    Hi guys thanks for all the help on this forum

    I believe that is likely that we could get a calculation question in the area of foreign currency translational risk. We have been told that the Asian currency is likely to weaken over the next three years.

    I think that we could be presented with a report that has been commissioned from the USD economist which will show a specific FX rate change over three years. They then could then ask us a two part question
    1) to show how the companies FX exposure could be hedged and
    2) show how the hedge works.

    This is similar to example on page 863 in Wards book.

    I haven’t seen anyone discuss this yet, thought I would throw it in to the mix.
    :cool:


  • Registered Users Posts: 120 ✭✭ Coldplayer


    MAX72 wrote: »
    Got the exact same figures myself......


    Exactly the same too


  • Registered Users Posts: 4 snipejuice


    Hi Can anyone please post their workings for the 3 scenarios?


  • Registered Users Posts: 120 ✭✭ Coldplayer


    mcloum22 wrote: »
    Hi, Could someone please tell me how ye got the 100m??[/QUOTE/]


    The 100m is just a notional amount,

    you should use the following cash flows

    yr1 290
    yr1and2 -(.13*300)(.8)
    yr2 (300)


  • Registered Users Posts: 96 ✭✭✭ Vaioer


    Hi guys thanks for all the help on this forum

    I believe that is likely that we could get a calculation question in the area of foreign currency translational risk. We have been told that the Asian currency is likely to weaken over the next three years.

    Yeah, we had considered that there might be a question on this as well.

    However the example you mention is one which hedges interest rate risk(which might also be a possible question, given that the bank is preferred to offer an interest only loan, which we aren't told if it will be floating or fixed).

    Surely translational risk is related to the exchange rate risk from transferring the assets and liabilities in Yuan back into €? In that case you would need to agree a currency future, not a interest rate future?


  • Closed Accounts Posts: 44 ✭✭✭ MAX72


    Hi guys thanks for all the help on this forum

    I believe that is likely that we could get a calculation question in the area of foreign currency translational risk. We have been told that the Asian currency is likely to weaken over the next three years.

    I think that we could be presented with a report that has been commissioned from the USD economist which will show a specific FX rate change over three years. They then could then ask us a two part question
    1) to show how the companies FX exposure could be hedged and
    2) show how the hedge works.

    This is similar to example on page 863 in Wards book.

    I haven’t seen anyone discuss this yet, thought I would throw it in to the mix.
    :cool:

    My understanding was that the case study and information is as given. If what you are saying is true they could put in what they like on the day.


  • Closed Accounts Posts: 44 ✭✭✭ MAX72


    I think everybody has the right answer to the relevant costing bar the skilled and unskilled labour!! It's either skilled is either 12 or 0, and unskilled is either 60 or 76, so if you could throw down what you tink and we can get a final answer for everyone ya???


    Skilled 0

    Unskilled 76 (ie 60+12)

    Thats only my opinion.............

    I have an overall loss of €16k


  • Registered Users Posts: 2 mcloum22


    For senario 1 I got WACC of 14.27%. Does anyone agree?

    I am unsure if we should use 1-22 years or 1-21 years?


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  • Registered Users Posts: 3,841 Running Bing


    So anything final on the cost of unskilled labour for lesbleu proposal?


    Its either 60,000 or 76,000.

    Im not sure which one I would say. On one hand 76,000 makes sense because your forgoing the contribution of 60k and paying the labour of 16k that could be used elsewhere.

    But my question is is'nt the 16k included already in the contribution for the other contract?


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