I got an 83% on it yesterday. Although I did do the same test about 1.5 months ago as my first practice test (wanted to do a hard one to get a real sense of where I was struggling, needless to say it was EVERYTHING!). I got a 60% on it the first time, so if I had to guess I would probably get a mid/high 70s if it was my first go round.
I had a question on #39 though
"If BioTLabs establishes a dividend and issues additional debt, the most likely effect on FCFF will be:"
a) no effect
b) a decrease in FCFF
c) an increase in FCFF
I put C, but the answer was A stating that changing the capital structure by increasing debt will have no impact on FCFF but will initially increase FCFE blah blah blah.
I disagree with this. If you increase the amount of debt FCFF will increase by the amount of the tax shield generated by the interest payment by the amount of int exp x tax rate.
check the other post on Book 2 Errata for an explanation.
Basically
FCFF = NI +Dep + Int(1-t) +FCInv + WCInv
NI = (EBIT - Int)(1-t) = EBIT(1-t) - Int(1-t)
FCFF = EBIT(1-t) + Dep + FCInv +WCInv
Makes sense mathematically, just not logically in my head. Oh well, I know I'm wrong so that'll be something that sticks out in my head if they ask the question.
mysterious I think I might have figured out the logic in my head for the interest tax shield. Since the ultimate goal in calculating FCFF is to come up with a current valuation of the firm (including projecting FCFF and discounting that back) the tax shield is effectively taken care of in WACC.
Remember: WACC=Rd(1-t)Wd +ReWe
So by increasing the amount of debt "FCFF" won't change, but the value of the firm will increase b/c of the higher weight to the lower cost of financing thus decreasing WACC and increasing V@t=0.
My first test aside from Qbank was V2|1|AM on Friday; received a 65% (demoralizing).
1|PM = 76.66%
2|AM = 75%
I thought they were quite difficult but as I said in a previous post I value the rigor they impress.
For those that took 1|PM, what were your thoughts on Q78? I felt Statement 3 was incomplete, which by all other CFA/Schweser measures, implies it is incorrect. To agree, I would have had to see, "...should have the same price [after adjusting for exchange rates] throughout the world."
发表于 2011-7-13 16:20
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