Is anyone else struggling with CFAI EOC for Corp Finance??? getting

mdfb79

I am only getting half right at best compared to getting 90% of Schweser EOC questions right. Is CFAI EOC more like the real deal???

defour44

Looks like I will fail this secton. No matter how much I practice. Just don't get it!

genuinecfa

At least there are plenty of Multiple choice EOC's for Corp Finance that you can practise, unlike PM or Derivatives where there are mostly essay type questions.

I found only Capital budgeting and mergers hard. Corp governance and capital structure seemed much easier.

Sportsman

I thought the questions were straightforward, especially the quantitative ones in relation to capital budgeting and comparable analysis. Those are no excuses type questions.

NO EXCUSES

DSquaredSlim

I agree...you have to do them carefully or you trip up easily...also you need a straight head when it comes to the distinction among EP, EI, AI, RI, which one is EVA, and which one applies to MVA!

Then, when you get that straight, you get confused about the relationship with alt. investments, where you also have ATCF and ATER, which sound similar because in both cases you have purchased something (building in alt. invest or machine in corp. finance), so there is your outlay. Then cash flows are similar, but no interest in capital budgeting...etc.

Quiz:

You have a project which would cost you $100 million, borrowed at 10% for one year. The project has one total cash flow at the end of the year of $112 Million. If your interest rate on the debt is 10%, your company's WACC is 12% and your required rate of return is 14%, should you take this project?

MiniMe7

Dreary Wrote:
-------------------------------------------------------
> Quiz:
>
> You have a project which would cost you $100
> million, borrowed at 10% for one year. The
> project has one total cash flow at the end of the
> year of $112 Million. If your interest rate on
> the debt is 10%, your company's WACC is 12% and
> your required rate of return is 14%, should you
> take this project?

I would take this project. Since I am investing only the money I have borrowed, my discount rate would be 10%. This will give me an NPV of 1.82.

Note: I have assumed no taxes since it is not given.

needhelp1700

Alta17 Wrote:
-------------------------------------------------------
> I am only getting half right at best compared to
> getting 90% of Schweser EOC questions right. Is
> CFAI EOC more like the real deal???

I think the CFAI EOC are more like the real exam. Just keep practicing.

luda002

Yeah NPV is negative, you wouldnt take the project.

yodacaia

Correct... true the project is profitable, but not profitable enough to satisfy your required rate of return.