Anyone sitting BS2 Exams?

Butters111

sinn7 wrote: »

I can't remember who said it, but someone said we don't have to learn the extra stuff on Moodle for Org theory. How do you know this?
>.<

I emailed her and she said there's no need that they were to help us with our CA and for our 'general education'!

sinn7

Butters111 wrote: »

I emailed her and she said there's no need that they were to help us with our CA and for our 'general education'!

Ah grand! There's a lot in them! Also I feel like that whole module is for our "general education"...

DeadMoney

Can anybody confirm if I have done this correctly?
Thanks

"pay us €100 a year for 10 years and we pay you €100 forever, with interest rate at 6% is this good deal?"

PV Annuity = 100(7.360) = 736

PV Perpetuity = C/i = 100/.06 = 1,666.67 (Accept deal)

sinn7

DeadMoney wrote: »

Can anybody confirm if I have done this correctly?
Thanks

"pay us €100 a year for 10 years and we pay you €100 forever, with interest rate at 6% is this good deal?"

PV Annuity = 100(7.360) = 736

PV Perpetuity = C/i = 100/.06 = 1,666.67 (Accept deal)

Almost, I think. The PV of the perpetuity is the PV is 10 years' time. So it's actually a future value. You gotta work it back to the present value (just using the normal PV formula, no annuities or perpetuities)

DeadMoney

sinn7 wrote: »

Almost, I think. The PV of the perpetuity is the PV is 10 years' time. So it's actually a future value. You gotta work it back to the present value (just using the normal PV formula, no annuities or perpetuities)

sorry am still a bit confused here. So do you mean that for the second part there is no annuity or perpetuity? So is it just a regular FV then?

Butters111

DeadMoney wrote: »

sorry am still a bit confused here. So do you mean that for the second part there is no annuity or perpetuity? So is it just a regular FV then?

The second part is a perpetuity it begins as you did:

Perpetuity= C/r, 100/.06= 1666.67 but this is the future value of what you will get because it starts in year 10 . Like you did with the annuity, you want to get the PV of this perpetuity so that you can compare the two. So you haveto discount the perpetuity by PV=FV(PV Factor):

PV= 1666.67(.558)= 930 - this is the PV of the perpetuity and it is still greater then the annuity so accept

DeadMoney

Got another one as well from the TVM problem sheet "You invest €1000 at 25% per annum. How long until your a millionaire?"

I know this has something to do with logs and I had the example from the lecture but lost the notes.

DeadMoney

Butters111 wrote: »

The second part is a perpetuity it begins as you did:

Perpetuity= C/r, 100/.06= 1666.67 but this is the future value of what you will get because it starts in year 10 . Like you did with the annuity, you want to get the PV of this perpetuity so that you can compare the two. So you haveto discount the perpetuity by PV=FV(PV Factor):

PV= 1666.67(.558)= 930 - this is the PV of the perpetuity and it is still greater then the annuity so accept

thanks a million!

sinn7

DeadMoney wrote: »

Got another one as well from the TVM problem sheet "You invest €1000 at 25% per annum. How long until your a millionaire?"

I know this has something to do with logs and I had the example from the lecture but lost the notes.

Okay this is what I have written down from the class he did this in.
PV = 1,000
r = 0.25
FV = 1,000,000
FV = PV(1+r)^n
1,000,000 = 1,000(1.25)^n
1,000 = 1.25^n
log1,000 = log1.25^n
log1,000 = nlog1.25
n = log1,000/log1.25
n = 30.96
n = 31 years

DeadMoney

sinn7 wrote: »

Okay this is what I have written down from the class he did this in.
PV = 1,000
r = 0.25
FV = 1,000,000
FV = PV(1+r)^n
1,000,000 = 1,000(1.25)^n
1,000 = 1.25^n
log1,000 = log1.25^n
log1,000 = nlog1.25
n = log1,000/log1.25
n = 30.96
n = 31 years

Thanks Sinn, yeah I remember writing the example in class like this but it doesn't make much sense to me, essentially the main calculation is log1,000/log1.25 so in the case of a similar question being asked where it requires you to find 'n', I'm just gonna guess that this is the method you follow.

Does anyone else feel that the lecturer didn't really explain his methods enough in this module, or maybe its just my lack of general understanding for numbers. Just compared to stats last semester though, that lecturer had a great way of making you understand the content.

sinn7

DeadMoney wrote: »

Thanks Sinn, yeah I remember writing the example in class like this but it doesn't make much sense to me, essentially the main calculation is log1,000/log1.25 so in the case of a similar question being asked where it requires you to find 'n', I'm just gonna guess that this is the method you follow.

Does anyone else feel that the lecturer didn't really explain his methods enough in this module, or maybe its just my lack of general understanding for numbers. Just compared to stats last semester though, that lecturer had a great way of making you understand the content.

Yeah whenever you need to find out how many years it's going to take you have to use logs to get the power of n down to something you can work with.

Ugh yeah I thought he flew through some of the examples way too fast. Then other times he'd do them out a really long way and then go "but you don't need too know this". That drove me mad cos I'd just end up more confused than when I started. Even now I sometimes do PV and FV the long way cos the short way gets lost on me

DeadMoney

sinn7 wrote: »

Yeah whenever you need to find out how many years it's going to take you have to use logs to get the power of n down to something you can work with.

Ugh yeah I thought he flew through some of the examples way too fast. Then other times he'd do them out a really long way and then go "but you don't need too know this". That drove me mad cos I'd just end up more confused than when I started. Even now I sometimes do PV and FV the long way cos the short way gets lost on me

Yeah its like he is trying to test us I think and he definitely doesn't make it easy. Somebody just mentioned asset calculation formulas on the facebook page and he said they would be asked the same way as portfolios. What are these again? Is this not the stuff we did in quiz 2 that he said would not be on our exam paper?

EDIT: sorry I think he meant CAPM and WACC etc

DeadMoney

Hey, do you think its bad that I have completely left out after tax cash flows as a question? Its just from the other papers he has asked cash flows as one Q in section B and then the other is on investment appraisal such as NPV, Payback, and IRR. So I figure I will be answering the investment appraisal question anyway since you can only chose one and this is my stronger point. I never learned the cash flows question and I think its a bit late now to be cramming it in. Is there any other long calculation material for sec B & C then or is this pretty much it? Obviously he could throw bonds in there or asset pricing calculations too.

sinn7

DeadMoney wrote: »

Hey, do you think its bad that I have completely left out after tax cash flows as a question? Its just from the other papers he has asked cash flows as one Q in section B and then the other is on investment appraisal such as NPV, Payback, and IRR. So I figure I will be answering the investment appraisal question anyway since you can only chose one and this is my stronger point. I never learned the cash flows question and I think its a bit late now to be cramming it in. Is there any other long calculation material for sec B & C then or is this pretty much it? Obviously he could throw bonds in there or asset pricing calculations too.

I'm not really sure about the long Qs tbh. I've done the investment appraisal stuff and really hoping it comes up (now that I've spent like an hour finally figuring out how to do IRR). Had a quick glance over the cash flows and it's kind of straight forward but you could also easily get confused on the day!

DeadMoney

sinn7 wrote: »

I'm not really sure about the long Qs tbh. I've done the investment appraisal stuff and really hoping it comes up (now that I've spent like an hour finally figuring out how to do IRR). Had a quick glance over the cash flows and it's kind of straight forward but you could also easily get confused on the day!

Yeah I reckon he could definitely change it up a bit but I think there will be a full Q from B on investment appraisal and one on after tax cash flows. What I think could get confusing is the short questions if he changes them up much. Hopefully they will be very similar to the 08 papers. There is usually half and half between theory and problems in the short Q's so a potential 25 marks to be picked up through short theory questions.

sinn7

DeadMoney wrote: »

Yeah I reckon he could definitely change it up a bit but I think there will be a full Q from B on investment appraisal and one on after tax cash flows. What I think could get confusing is the short questions if he changes them up much. Hopefully they will be very similar to the 08 papers. There is usually half and half between theory and problems in the short Q's so a potential 25 marks to be picked up through short theory questions.

Yeah I was working through the exam papers and did the 06/07 one yesterday. Aside from the short Qs we didn't cover (I hope), they seemed grand

Butters111

Hey I'm looking at casflows now... does anyone know if 'depreciation on machines' is to be included? and 'the interest that will be charged on the $20m bank loan needed to initiate the project'? (this is from the notes) thanks

sinn7

Butters111 wrote: »

Hey I'm looking at casflows now... does anyone know if 'depreciation on machines' is to be included? and 'the interest that will be charged on the $20m bank loan needed to initiate the project'? (this is from the notes) thanks

You leave both of them out. I don't know why but I have written down "ignore depreciation, ignore interest rates and dividends"

Butters111

sinn7 wrote: »

You leave both of them out. I don't know why but I have written down "ignore depreciation, ignore interest rates and dividends"

OK thanks!:)

DeadMoney

Just one other thing about IRR. Once you find the aanuity factor and then go along the tables to determine roughly were it lies, will the tables be fine for this coz in the example that An Citeog done the interest rates were higher than the tables went to?

sinn7

DeadMoney wrote: »

Just one other thing about IRR. Once you find the aanuity factor and then go along the tables to determine roughly were it lies, will the tables be fine for this coz in the example that An Citeog done the interest rates were higher than the tables went to?

I wasn't really following the example An Citeog did but I was doing an example in the library yesterday with the help of a book.
In that question you were told the discount rate was 10%. So I worked out the NPV for 10% and since it was postive, the book said the IRR would be higher than 10%. So I just randomly picked 12% and worked out the NPV for that too cos it was only a little bit higher.
I'm not really sure if that helps at all though...

DeadMoney

sinn7 wrote: »

I wasn't really following the example An Citeog did but I was doing an example in the library yesterday with the help of a book.
In that question you were told the discount rate was 10%. So I worked out the NPV for 10% and since it was postive, the book said the IRR would be higher than 10%. So I just randomly picked 12% and worked out the NPV for that too cos it was only a little bit higher.
I'm not really sure if that helps at all though...

Yeah but the whole guessing thing confuses me so I'm just gonna try and do it the other way that Citeog did it as it allows to just use the tables to estimate. If this question comes up I'm sure I will butcher it but hopefully I can get as many marks as I can for attempt.

DeadMoney

For 2008 Q.12 Part A (II) NPV for each project,
did anyone get €56.936.60 for NPV of Drummcondra

Just want to see if i'm doing it correctly, if you haven't solutions done out don't bother going through it as it just takes time.
thanks

Butters111

sinn7 wrote: »

I wasn't really following the example An Citeog did but I was doing an example in the library yesterday with the help of a book.
In that question you were told the discount rate was 10%. So I worked out the NPV for 10% and since it was postive, the book said the IRR would be higher than 10%. So I just randomly picked 12% and worked out the NPV for that too cos it was only a little bit higher.
I'm not really sure if that helps at all though...

So do you just use the first discount rate you used for calculating the original NPV and then guess the higher one and then put these into the formula?

For section 2 have we to do 'ex-ante calculations' like all expected return, variance and standard deviation,'covariance','corelation coefficient', 'ex-post' and portfolio calculations? or do we just do all the thoery, WACC and CAPM?

DeadMoney

Butters111 wrote: »

For section 2 have we to do 'ex-ante calculations' like all expected return, variance and standard deviation,'covariance','corelation coefficient', 'ex-post' and portfolio calculations? or do we just do all the thoery, WACC and CAPM?

No I really doubt we have to be able to write about things like correlation, covariance, standard deviation etc. We would only have to comment on them if they came up as a calculation question but he has already confirmed they will not so I'd say forget them. WACC, CAPM etc could all come up though so know these.

sinn7

DeadMoney wrote: »

For 2008 Q.12 Part A (II) NPV for each project,
did anyone get €56.936.60 for NPV of Drummcondra

Just want to see if i'm doing it correctly, if you haven't solutions done out don't bother going through it as it just takes time.
thanks

Yep that's what's in my notes

sinn7

Butters111 wrote: »

So do you just use the first discount rate you used for calculating the original NPV and then guess the higher one and then put these into the formula?

Yep I think so! That's the way the book appeared to be doing it anyway

DeadMoney

An Citeog wrote: »

Step 4
Insert these into the IRR formula. I've no idea what formula is used in your notes but they're all variations of the same one. The one I use is:

IRR = Rate1 + NPV1(Rate2-Rate1)/NPV1 - NPV2

IRR = 21% + 1,200(22%-21%)/1,200+180 = 21.87%

I keep plugging these values in the this formula and I cannot get 21.87% as the answer. Am confused also as to why there is a minus sign between NPV1 and NPV 2 but in the calculation they are added (in bold).

DeadMoney

sinn7 wrote: »

Yep that's what's in my notes

thanks

sinn7

DeadMoney wrote: »

I keep plugging these values in the this formula and I cannot get 21.87% as the answer. Am confused also as to why there is a minus sign between NPV1 and NPV 2 but in the calculation they are added (in bold).

I know that the 2nd NPV is actually -180 so it goes 1,200 - (-180) wihch gives you 1,200 + 180