Financial Management 3 (FM303) Tutorial Letter: October 2013 ... - imm
Page 1 of 5
Financial Management 3 (FM303) Tutorial Letter: October 2013 examination session Dear Student Please make note of the following key areas and notes pertaining to the Financial Management 3 October Examination. You are reminded that the detail provided herein is merely a guideline for clarity and direction and you are encouraged to complete the entirety of the module content as outlined in the Learner Guide. Exam Structure The paper consists of six (6) questions resulting in an exam total of 100 marks. All questions must be attempted. Question 1 consists of a multiple choice question worth 10 marks which must be answered on the space provided on the front page of your answer books. Question 2 (10 marks) involving fundamentals of financial management calculations. Question 3 (35 marks) comprises of two independent parts. One involving theory and definitions and the other risk and return calculations. 4 (20 marks), 5 (20 marks) and 6 (5 marks) are all standalone questions covering independent concepts, calculations and interpretations (see content below.)
____________________________________________________________________________________________________________ © IMM Graduate School of Marketing October 2013 examination session FM303
Page 2 of 5 Exam Content Question 1 (MCQ) comprises of theoretical principles and definitions. 59% (59 marks) of the paper is based on calculations of the module and on interpretation of calculated figures. The remainder of the questions incorporate theoretical aspects of the sections covered within the study units. You will be required to comment, analyse or interpret your results for various answers. Calculation focus: Leverage and capital structure, fundamentals of financial management (MVA, EVA, value of operations, value of share capital, total value etc.), risk and return fundamentals (standard deviation, CV, etc.), long term investment calculations (NPV, IRR, payback period, Gordon Constant Growth valuation model etc.), WACC. You are reminded to have fully grasped the following concepts amongst others in order to master the topics covered in the examination: The theory on leasing (types of leases, characteristics etc.), theory on capital budgeting, risk and return in its entirety (including a working understanding of the terms), cost of share capital and leverage. Please note Appendix A and Appendix B on page 4 and 5 of this Tutorial Letter which relate to the formula sheet and interest factor tables you will be given in your exam. General Manage your time carefully! You are reminded to show your workings and calculations where necessary and ensure that they can be easily referenced. Examiners will not ‘hunt’ for substantiating workings. This has cost students in the past. Number all questions CLEARLY and indicate ‘End’ when you have completed all questions in the exam.
____________________________________________________________________________________________________________ © IMM Graduate School of Marketing October 2013 examination session FM303
Page 3 of 5 It will most certainly aid in being time efficient in an exam if you are able to master the use of a financial calculator, however, you will not be penalised should you choose to use a formula. It is a requirement to continue to illustrate all workings in any answer. There are some questions which provide suggested formats. These are to be used as a guide and time must not be wasted on formats unnecessarily. NO ANSWER SHEET is provided in this exam session. Look to the required and given guidelines, where applicable, on how to structure your answers. You are reminded to clearly and logically answer each question in a format that can be easily followed by the marker. An indication as to how many decimal places should be applied in your answers will be provided wherever necessary. You are encouraged to follow the indicated units carefully. Use mark allocation as a guide as to how much information is required when formulating your responses. Ensure that you indicate negative/subtracted values through the use of ‘brackets’. May we remind you that we are always available to assist with academic queries. Academic queries should be submitted in writing to: [email protected] We wish you a successful October 2013 examination session. Kind regards
The IMM GSM Team
____________________________________________________________________________________________________________ © IMM Graduate School of Marketing October 2013 examination session FM303
Page 4 of 5 APPENDIX A FORMULA SHEET
MVA = Market value of shares – Equity capital supplied by shareholders EVA = EBIT (1 – Tax rate) – (Total net operating capital) (WACC) EVA = (Operating capital) (ROIC – WACC) DOL = DOL at base sales level =
(
)
DFL = DFL at base level EBIT =
DTL = DTL = DOL x DFL Value of ordinary equity = Total value = Value of operations + Value of non-operating assets Vop = FCF(1+g) / WACC-g Value of ordinary share capital = Total value – Value of debt
____________________________________________________________________________________________________________ © IMM Graduate School of Marketing October 2013 examination session FM303
Page 5 of 5 APPENDIX B – TIME VALUE OF MONEY TABLE
Present value of R1 (PVIF) n
9%
12%
13%
18%
1
0.9174
0.8929
0.8850
0.8475
2
0.8417
0.7972
0.7831
0.7182
3
0.7722
0.7118
0.6931
0.6086
4
0.7084
0.6355
0.6133
0.5158
5
0.6499
0.5674
0.5428
0.4371
6
0.5963
0.5066
0.4803
0.3704
7
0.5470
0.4523
0.4251
0.3139
8
0.5019
0.4039
0.3762
0.2660
9
0.4604
0.3606
0.3329
0.2255
10
0.4224
0.3220
0.2946
0.1911
11
0.3875
0.2875
0.2607
0.1619
12
0.3555
0.2567
0.2307
0.1372
13
0.3262
0.2292
0.2042
0.1163
____________________________________________________________________________________________________________ © IMM Graduate School of Marketing October 2013 examination session FM303
Financial Management 3 (FM303) Tutorial Letter: October 2013 examination session Dear Student Please make note of the following key areas and notes pertaining to the Financial Management 3 October Examination. You are reminded that the detail provided herein is merely a guideline for clarity and direction and you are encouraged to complete the entirety of the module content as outlined in the Learner Guide. Exam Structure The paper consists of six (6) questions resulting in an exam total of 100 marks. All questions must be attempted. Question 1 consists of a multiple choice question worth 10 marks which must be answered on the space provided on the front page of your answer books. Question 2 (10 marks) involving fundamentals of financial management calculations. Question 3 (35 marks) comprises of two independent parts. One involving theory and definitions and the other risk and return calculations. 4 (20 marks), 5 (20 marks) and 6 (5 marks) are all standalone questions covering independent concepts, calculations and interpretations (see content below.)
____________________________________________________________________________________________________________ © IMM Graduate School of Marketing October 2013 examination session FM303
Page 2 of 5 Exam Content Question 1 (MCQ) comprises of theoretical principles and definitions. 59% (59 marks) of the paper is based on calculations of the module and on interpretation of calculated figures. The remainder of the questions incorporate theoretical aspects of the sections covered within the study units. You will be required to comment, analyse or interpret your results for various answers. Calculation focus: Leverage and capital structure, fundamentals of financial management (MVA, EVA, value of operations, value of share capital, total value etc.), risk and return fundamentals (standard deviation, CV, etc.), long term investment calculations (NPV, IRR, payback period, Gordon Constant Growth valuation model etc.), WACC. You are reminded to have fully grasped the following concepts amongst others in order to master the topics covered in the examination: The theory on leasing (types of leases, characteristics etc.), theory on capital budgeting, risk and return in its entirety (including a working understanding of the terms), cost of share capital and leverage. Please note Appendix A and Appendix B on page 4 and 5 of this Tutorial Letter which relate to the formula sheet and interest factor tables you will be given in your exam. General Manage your time carefully! You are reminded to show your workings and calculations where necessary and ensure that they can be easily referenced. Examiners will not ‘hunt’ for substantiating workings. This has cost students in the past. Number all questions CLEARLY and indicate ‘End’ when you have completed all questions in the exam.
____________________________________________________________________________________________________________ © IMM Graduate School of Marketing October 2013 examination session FM303
Page 3 of 5 It will most certainly aid in being time efficient in an exam if you are able to master the use of a financial calculator, however, you will not be penalised should you choose to use a formula. It is a requirement to continue to illustrate all workings in any answer. There are some questions which provide suggested formats. These are to be used as a guide and time must not be wasted on formats unnecessarily. NO ANSWER SHEET is provided in this exam session. Look to the required and given guidelines, where applicable, on how to structure your answers. You are reminded to clearly and logically answer each question in a format that can be easily followed by the marker. An indication as to how many decimal places should be applied in your answers will be provided wherever necessary. You are encouraged to follow the indicated units carefully. Use mark allocation as a guide as to how much information is required when formulating your responses. Ensure that you indicate negative/subtracted values through the use of ‘brackets’. May we remind you that we are always available to assist with academic queries. Academic queries should be submitted in writing to: [email protected] We wish you a successful October 2013 examination session. Kind regards
The IMM GSM Team
____________________________________________________________________________________________________________ © IMM Graduate School of Marketing October 2013 examination session FM303
Page 4 of 5 APPENDIX A FORMULA SHEET
MVA = Market value of shares – Equity capital supplied by shareholders EVA = EBIT (1 – Tax rate) – (Total net operating capital) (WACC) EVA = (Operating capital) (ROIC – WACC) DOL = DOL at base sales level =
(
)
DFL = DFL at base level EBIT =
DTL = DTL = DOL x DFL Value of ordinary equity = Total value = Value of operations + Value of non-operating assets Vop = FCF(1+g) / WACC-g Value of ordinary share capital = Total value – Value of debt
____________________________________________________________________________________________________________ © IMM Graduate School of Marketing October 2013 examination session FM303
Page 5 of 5 APPENDIX B – TIME VALUE OF MONEY TABLE
Present value of R1 (PVIF) n
9%
12%
13%
18%
1
0.9174
0.8929
0.8850
0.8475
2
0.8417
0.7972
0.7831
0.7182
3
0.7722
0.7118
0.6931
0.6086
4
0.7084
0.6355
0.6133
0.5158
5
0.6499
0.5674
0.5428
0.4371
6
0.5963
0.5066
0.4803
0.3704
7
0.5470
0.4523
0.4251
0.3139
8
0.5019
0.4039
0.3762
0.2660
9
0.4604
0.3606
0.3329
0.2255
10
0.4224
0.3220
0.2946
0.1911
11
0.3875
0.2875
0.2607
0.1619
12
0.3555
0.2567
0.2307
0.1372
13
0.3262
0.2292
0.2042
0.1163
____________________________________________________________________________________________________________ © IMM Graduate School of Marketing October 2013 examination session FM303
