2014 ACCA f9 revision kit BPP financial management

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PAPER F9

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FINANCIAL MANAGEMENT

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BPP Learning Media is the sole ACCA Platinum Approved Learning Partner – content
for the ACCA qualification. In this, the only Paper F9 Practice and Revision Kit to be
reviewed by the examiner:
We discuss the best strategies for revising and taking your ACCA exams



We show you how to be well prepared for your exam



We give you lots of great guidance on tackling questions



We show you how you can build your own exams



We provide you with three mock exams including the December 2012 exam



We provide the ACCA examiner's answers as well as our own to the June and December
2012 exams as an additional revision aid

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Our i-Pass product also supports this paper.

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FOR EXAMS UP TO JUNE 2014

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First edition 2007
Seventh edition January 2013
ISBN 9781 4453 6650 0
(previous ISBN 9781 4453 7999 9)

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e-ISBN 9781 4453 6953 2

All our rights reserved. No part of this publication may be
reproduced, stored in a retrieval system or transmitted, in
any form or by any means, electronic, mechanical,
photocopying, recording or otherwise, without the prior
written permission of BPP Learning Media Ltd.

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British Library Cataloguing-in-Publication Data
A catalogue record for this book
is available from the British Library

Published by

www.bpp.com/learningmedia

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BPP Learning Media Ltd
BPP House, Aldine Place
London W12 8AA

We are grateful to the Association of Chartered Certified
Accountants for permission to reproduce past
examination questions. The suggested solutions in the
exam answer bank have been prepared by BPP Learning
Media Ltd, except where otherwise stated.

Ricoh House
Ullswater Crescent
Coulsdon
CR5 2HR

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Printed in the United Kingdom by Ricoh

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Your learning materials, published by BPP Learning
Media Ltd, are printed on paper sourced from
sustainable, managed forests.

©
BPP Learning Media Ltd
2013

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Contents

Page

Finding questions

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Question index .................................................................................................................................................................. v
Topic index .................................................................................................................................................................... viii

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Helping you with your revision – the ONLY F9 Practice and
Revision Kit to be reviewed by the examiner! ............................................................... x
Revising F9

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Topics to revise................................................................................................................................................................ xi
Question practice ............................................................................................................................................................. xi
Passing the F9 exam ....................................................................................................................................................... xii

Exam formulae ............................................................................................................................................................... xiv
Formulae to learn ............................................................................................................................................................ xv
Exam information .......................................................................................................................................................... xvii
Useful websites ............................................................................................................................................................. xxii

Planning your question practice

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BPP Learning Media's question plan ........................................................................................................................... xxiii
Build your own exams..................................................................................................................................................xxvii

Questions and answers

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Questions..........................................................................................................................................................................3
Answers ..........................................................................................................................................................................71

Exam practice

Mock exam 1

Questions ............................................................................................................................................................285

Plan of attack .......................................................................................................................................................291

Answers...............................................................................................................................................................292

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Mock exam 2

Questions ............................................................................................................................................................307

Plan of attack .......................................................................................................................................................313

Answers...............................................................................................................................................................314

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Mock exam 3 (December 2012)

Questions ............................................................................................................................................................329

Plan of attack .......................................................................................................................................................335

Answers...............................................................................................................................................................336

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ACCA examiner's answers

June 2012............................................................................................................................................................351

December 2012 ...................................................................................................................................................359

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Mathematical tables ..........................................................................................................................................371
Review form

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A note about copyright
Dear Customer
What does the little © mean and why does it matter?

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Your market-leading BPP books, course materials and e-learning materials do not write and update themselves.
People write them: on their own behalf or as employees of an organisation that invests in this activity. Copyright law
protects their livelihoods. It does so by creating rights over the use of the content.
Breach of copyright is a form of theft – as well as being a criminal offence in some jurisdictions, it is potentially a

serious breach of professional ethics.

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With current technology, things might seem a bit hazy but, basically, without the express permission of BPP
Learning Media:
Photocopying our materials is a breach of copyright



Scanning, ripcasting or conversion of our digital materials into different file formats, uploading them to
facebook or emailing them to your friends is a breach of copyright

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

You can, of course, sell your books, in the form in which you have bought them – once you have finished with
them. (Is this fair to your fellow students? We update for a reason.) Please note the e-products are sold on a single
user licence basis: we do not supply ‘unlock’ codes to people who have bought them second-hand.

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And what about outside the UK? BPP Learning Media strives to make our materials available at prices students can
afford by local printing arrangements, pricing policies and partnerships which are clearly listed on our website. A
tiny minority ignore this and indulge in criminal activity by illegally photocopying our material or supporting
organisations that do. If they act illegally and unethically in one area, can you really trust them?

Using your BPP Learning Media products

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This Kit gives you the question practice and guidance you need in the exam. Our other products can also help you
pass:
Learning to Learn Accountancy gives further valuable advice on revision



Passcards provide you with clear topic summaries and exam tips



Success CDs help you revise on the move



i-Pass CDs offer tests of knowledge against the clock



Underlying knowledge CD offers guidance on assumed knowledge for Options papers P4, P5, P6, P7

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

Finding questions

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Question index

The headings in this checklist/index indicate the main topics of questions, but questions often cover several
different topics.

Some questions set under the old syllabus Financial Management and Control (FMC) are included because their
style and content are similar to those that appear in the Paper F9 exam.

Time

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Marks

allocation
Mins

ABC Co

25

2

RZP Co (FMC, 6/05)

25

3

Tagna (FMC, 6/03, amended)

4

Phoenix

JIT and EOQ

6

Thorne Co (FMC, 12/05)

7

Velm Co (FMC, 6/03)

8

PCB Co

9

Special Gift Suppliers (FMC, 12/01)

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5

10 Ulnad Co (Pilot paper)
11 PKA Co (12/07)
12 FLG Co (6/08)
13 HGR Co (6/09)
14 APX Co (12/09)

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15 ZSE Co (6/10)
16 WQZ Co (12/10)
17 Bold Co (12/11)
18 Wobnig Co (06/12)

3

71

45

4

73

25

45

5

75

25

45

6

77

25

45

8

80

25

45

8

82

25

45

9

84

25

45

10

87

25

45

11

89

25

45

12

91

25

45

13

94

25

45

13

97

25

45

14

100

25

45

15

104

25

45

16

107

25

45

17

110

25

45

18

112

25

45

19

115

n/a

n/a

21

117

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Part C: Working capital management

Answer

45

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Part B: Financial management environment

Question

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Part A: Financial management function
1

Page number

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Part D: Investment appraisal

19 Preparation question: Investment appraisal

25

45

21

118

21 Preparation question: NPV with inflation and tax

n/a

n/a

22

121

22 Trecor Co (Pilot paper)

25

45

23

122

23 OKM Co (6/10)

25

45

23

124

24 CJ Co (12/10)

25

45

24

127

25 BRT Co (6/11)

25

45

25

130

26 Preparation question: Sensitivity analysis

n/a

n/a

26

133

27 Umunat Co (FMC, 12/04)

25

45

26

135

28 Duo Co (12/07)

25

45

27

137

29 SC Co (6/08)

25

45

27

140

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20 Chromex Co

Finding questions

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Time

Question

Answer

30 Rupab Co (12/08)

25

45

28

144

31 PV Co (6/09)

25

45

29

147

32 AGD Co (FMC, 12/05)

25

45

29

150

33 Leaminger Co (FMC, 12/02)

25

45

30

153

34 ASOP Co (12/09)

25

45

31

155

35 Preparation question: Bread Products Co

n/a

n/a

31

159

36 Filtrex Co

25

45

32

160

37 Warden Co (12/11)

25

45

32

163

38 Ridag Co (06/12)

25

45

33

165

39 Tirwen Co (FMC, 12/04)
40 Newsam Co
41 Arwin (FMC, 6/04)
42 Food retailers
43 CF Co
45 Echo Co (12/07)
46 JJG Co (6/09)
47 Nugfer Co (12/10)
48 YNM Co (6/11)

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49 Bar Co (12/11)

Part F: Cost of capital
50 IML Co
51 KJI

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52 WEB Co
53 CAP Co
54 FAQ
55 Droxfol Co (Pilot paper)

58 YGV Co (6/10)
59 NN Co (12/10)
60 AQR Co (6/11)

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45

35

168

25

45

36

171

25

45

37

174

25

45

38

177

25

45

38

179

25

45

39

182

25

45

40

185

25

45

41

189

25

45

42

192

25

45

43

195

25

45

44

198

25

45

45

200

25

45

45

202

25

45

46

205

25

45

47

207

25

45

48

210

25

45

48

212

25

45

49

215

25

45

50

218

25

45

51

221

25

45

52

224

25

45

53

227

25

45

53

230

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61 Corhig Co (06/12)

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56 Burse Co (6/08)
57 DD Co (12/09)

25

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44 TFR Co (FMC, 6/07)

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allocation
Mins

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Page number

Marks

Part E: Business finance

Finding questions

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Time

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Marks

allocation
Mins

Question

Answer

62 MC

25

45

55

232

63 BST

25

45

56

235

64 Phobis Co (12/07)

25

45

57

239

65 THP Co (6/08)

25

45

57

243

66 Dartig Co (12/08)

25

45

58

246

67 KFP Co (6/09)

25

45

59

249

68 QSX Co (6/10)

25

45

60

252

69 Close Co (12/11)

25

45

61

254

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Part H: Risk management

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Part G: Business valuations

70 BS
71 Nedwen Co (Pilot paper)
72 Boluje Co (12/08)
73 NG Co (12/09)

45

62

257

25

45

62

259

25

45

63

262

25

45

64

264

25

45

64

268

n/a

n/a

65

270

n/a

n/a

65

272

25

45

66

274

25

45

67

277

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74 ZPS Co (6/11)

25

75 Preparation question: Interest rates
76 Preparation question: QW
77 Gorwa Co (12/08)

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78 Zigto Co (06/12)

Mock exam 1
Questions 79 to 82

Mock exam 2

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Questions 83 to 86

Mock exam 3 (December 2012)

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Questions 87 to 90

Finding questions

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Topic index

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Listed below are the key Paper F9 syllabus topics and the numbers of the questions in this Kit covering those
topics.
If you need to concentrate your practice and revision on certain topics or if you want to attempt all available
questions that refer to a particular subject, you will find this index useful.

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Finding questions

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Question numbers
34, 35
50, 53, 54, 56, 57
62 – 69
33, 36
30, 50, 53, 54
6, 8, 10, 13, 43
12
3, 20
40, 52, 64
52 – 61
42, 45, 48, 57, 59

5, 11, 12, 16
11, 70 – 74
4, 14
40, 41, 55, 57, 58
21, 22, 23, 71
75, 76, 77
3, 75, 76, 77
5, 11, 16
19 – 38
19, 22, 28, 29, 31
43
32, 33, 34, 45
2, 66
19, 21 – 38
1, 11, 15, 46, 48
8, 77
19, 20, 27, 31
54, 67, 72
24, 30, 54
1, 2, 4, 12, 20, 39 – 42, 44, 46, 51, 55
7, 9, 11, 12, 13, 15, 77
39, 45, 46, 65, 66, 73
25, 27
26, 27, 28
1, 3, 29, 46
43, 44
39 – 48, 52, 58, 65, 72
50, 64, 65
1, 2, 68
3

41, 52, 53, 55, 56, 57, 58, 59, 60, 67
7, 8, 9, 10, 12, 13, 14, 32
5 – 18, 74

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Syllabus topic
Asset replacement decisions
Betas
Business valuation
Capital rationing
CAPM
Cash management
Cash operating cycle
Competition policy
Convertible loan notes
Cost of capital
Dividend policy
EOQ
Exchange rate risk
Financial intermediaries
Gearing
Inflation
Interest rate risk

Interest rates
Inventory management
Investment appraisal
IRR
Islamic finance
Leasing
Managerial reward schemes
NPV
Objectives
Overtrading
Payback
Pecking order
Project-specific discount rate
Ratio analysis
Receivables management
Rights issue
Risk and uncertainty
Sensitivity analysis
Shareholder wealth maximisation
SME's
Sources of finance
Stock market efficiency
Total shareholder return
Value for money
WACC
Working capital financing
Working capital management

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/>Planning your question practice

Our guidance from page xxiii shows you how to organise your question practice, either by attempting questions
from each syllabus area or by building your own exams – tackling questions as a series of practice exams.

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June and December 2013 exams

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BPP’s answers for these exams will be available for free after the exams on />
Finding questions

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BPP Learning Media – the sole Platinum Approved Learning Partner content

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Helping you with your revision – the ONLY F9 Practice and
Revision Kit to be reviewed by the examiner!

Tackling revision and the exam

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Using feedback obtained from ACCA examiners as part of their review:

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As ACCA’s sole Platinum Approved Learning Partner – content, BPP Learning Media gives you the unique
opportunity to use examiner-reviewed revision materials for the 2013 and June 2014 exams. By incorporating the
examiner’s comments and suggestions regarding syllabus coverage, the BPP Learning Media Practice and Revision
Kit provides excellent, ACCA-approved support for your revision.



We look at the dos and don’ts of revising for, and taking, ACCA exams



We focus on Paper F9; we discuss revising the syllabus, what to do (and what not to do) in the exam, how to
approach different types of question and ways of obtaining easy marks

We provide signposts to help you plan your revision.

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Selecting questions
A full question index



A topic index listing all the questions that cover key topics, so that you can locate the questions that provide
practice on these topics, and see the different ways in which they might be examined



BPP's question plan highlighting the most important questions and explaining why you should attempt
them



Build your own exams, showing how you can practise questions in a series of exams

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Making the most of question practice

At BPP Learning Media we realise that you need more than just questions and model answers to get the most from
your question practice.



We show you how you can pick up Easy marks on some questions, as we know that picking up all readily
available marks often can make the difference between passing and failing



We include marking guides to show you what the examiner rewards



We include examiners’ comments to show you where students struggled or performed well in the actual
exam



We refer to the 2012 BPP Study Text (for exams up to June 2014) for detailed coverage of the topics
covered in questions



In a bank at the end of this Kit we include the examiner's answers to the June and December 2012 papers.
Used in conjunction with our answers they provide an indication of all possible points that could be made,
issues that could be covered and approaches to adopt.

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Our Top tips included for certain questions provide essential advice on tackling questions, presenting
answers and the key points that answers need to include

Revising F9

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Attempting mock exams

There are three mock exams that provide practice at coping with the pressures of the exam day. We strongly
recommend that you attempt them under exam conditions. Mock exams 1 and 2 reflect the question styles and
syllabus coverage of the exam; Mock exam 3 is the December 2012 paper.

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Revising F9

Topics to revise

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The exam consists of four questions, all of which are compulsory. No one section in the syllabus is more important
than another so there are no short-cuts. You will have to be able to answer questions on the entire syllabus.

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Question practice

You need to practise exam standard and exam style questions on a regular basis.

As you get closer to the exam, try to do complete questions in 45 minutes so that you are able to work at an
appropriate speed.

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Make sure you practise written sections as well as the calculations.

Revising F9

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Passing the F9 exam
Displaying the right qualities

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The aim of Paper F9 is to develop the knowledge and skills expected of a finance manager in relation to investment,
financing and dividend decisions.
You need to be able to communicate your understanding clearly in an exam context. Calculations and discussions
are equally important so do not concentrate on the numbers and ignore the written parts.

You need to be able to:

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Discuss the role and purpose of the financial management function
Assess and discuss the impact of the economic environment on financial management
Discuss and apply working capital management techniques
Carry out effective investment appraisal
Identify and evaluate alternative sources of business finance
Explain and calculate cost of capital and the factors that affect it
Explain and apply risk management techniques in business

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
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


Avoiding weaknesses

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Do not avoid any syllabus areas, they are all equally examinable. Make sure you can discuss techniques as well as
apply them, you will not pass this exam with calculations alone.

Plan your answers to ensure you do not run out of time and miss out on easy marks.

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Using the reading time

You will have 15 minutes reading time for Paper F9. Here are some helpful tips on how best to utilise this time.
Speed read through the question paper, jotting down any ideas that come to you about any of the questions.



Decide the order which you're likely to tackle the questions (probably easiest questions first, most difficult
questions last).



Spend the remainder of the reading time reading the question(s) you will do first in detail, jotting down
proformas and plans (any proformas or plans written on the question paper should be reproduced in the
answer booklet).



When you can start writing, get straight on with the question(s) you have planned in detail. If you have
looked at all the questions during the reading time, this should hopefully mean that you will find it easier to
answer the more difficult questions when you come to them, as you will have been generating ideas and
remembering facts while answering the easier questions.

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Choosing which questions to answer first

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You can use the planning time in the exam to choose the order in which to attempt the questions. You may prefer to
attempt the questions that you are more confident about first. However, make sure you watch the time carefully and
do not spend too long on any one question.

Revising F9

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Alternatively, you could answer the questions in strict order. This will force you to spend an equal time on each
question but make sure you leave plenty of space if you decide to move on and finish a question later.

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Tackling questions

Write a short plan for each question containing bullet points per mark and use it to write your answer when the
writing time begins.
If you get stuck, make an assumption, write it down and move on.

Never overrun on any question and once the 45 minutes is up, move on to the next.

Gaining the easy marks

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Easy marks in this paper tend to fall into two categories.

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Make sure your answers are focused and specific to the organisation in the question. Show clear workings for your
calculations and write full sentences in your explanations.

Calculations

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The calculations within a question will get progressively harder and easy marks will be available in the easy stages.

Set our your calculations clearly and show all your workings in a clear format. Use a proforma, for example in
complex NPV questions and slot the simpler figures into the proforma straight away before you concentrate on the
figures that need a lot of adjustment.

Discussions

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Discussions that are focused on the specific organisation in the question will gain more marks than regurgitation of
knowledge. Read the question carefully and more than once, to ensure you are actually answering the specific
requirements.

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Pick out key words such as 'describe', 'evaluate' and 'discuss'. These all mean something specific: 'Describe'
means to communicate the key features of; 'Evaluate' means to assess the value of; 'Discuss' means to examine in
detail by argument.

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Clearly label the points you make in discussions so that the marker can identify them all rather than getting lost in
the detail. Provide answers in the form requested, particularly using report format if asked for and giving
recommendations if required.

Revising F9

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Exam formulae

Set out below are the formulae which you will be given in the exam, and formulae which you should learn. If you are
not sure what the symbols mean, or how the formulae are used, you should refer to the appropriate chapter in this
Study Text

Chapter in Study Text

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Exam formulae
Economic Order Quantity

5

2C 0 D
Ch

=

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Miller-Orr Model
Return point = Lower limit + (1/3  spread)

The Capital Asset Pricing Model

The Asset Beta Formula

The Growth Model

P0 =

D0 (1 g)
D (1 g)
or P0 = 0
(Ke  g)
(re  g)

Gordon’s Growth Approximation

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g = bre

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

  Vd (1 T)
Ve
d 
ßa = 
e  + 
 (Ve  Vd (1 T))   (Ve  Vd (1 T)) 

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E(ri) = Rf + ßi (E (rm) – Rf)

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1

3
3

 4  transaction cost  variance of cash flows 
Spread = 3 

interest rate





The weighted average cost of capital

 Ve 
WACC = 
 ke +
 Ve  Vd 

15

16

17

17

15

 Vd 

 kd (1–T)
 Ve  Vd 

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The Fisher formula

(1 + i) = (1 + r)(1 + h)

6

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Purchasing Power Parity and Interest Rate Parity

F0 = S0 

(1 ic )
(1 ib )

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(1 hc )
(1 hb )

Revising F9

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S1 = S0 

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Formulae to learn
ROCE =

Profit from operations
%
Capital employed

ROCE =

Profit from operations
Revenue

Revenue
Capital employed

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Profitability ratios include:

Profit margin  Asset turnover
Debt ratios include:

Book value of debt
Book value of equity

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Gearing =

Profit from operations
Interest

Interest coverage =

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Liquidity ratios include:

Current ratio = Current assets : Current liabilities

Acid Test ratio = Current assets : Current liabilities (less inventory)
Shareholder investor ratios include:

Profits distributable to ordinary shareholders
Number of ordinary shares issued

Earnings per share =

Market price per share
EPS

Price-earnings ratio =

Receivables

Av. collection period

(credit) sales

 365 days

(a)

Finished goods:

(b)

WIP:

(c)

Raw material:

Finished goods

Cost of production

 365 days

ac
c

Raw material

Raw material purchases
Payables

ree

(credit) purchases

 365 days

 365 days

NPV
a
(b – a)
NPV - NPV
a
b

Equivalent annual cost =

htt

 365 days

Cost of sales

WIP

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/f

IRR = a +

as
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Inventory days

Av. payables period

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Dividend per share
× 100
Market price per share

dy

m

Dividend yield =

NPV of costs

Annuity factor for the life of the project

Revising F9

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/>D
Cost of equity = Ke  1  g
P
0
i(1  T)
P
0

Cost of preference shares = Kpref =

Market Value

=

(ex div)

d
P0

NPV of cash inflows
Cash outflow

Revising F9

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ac
c

as
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Profitability index =

Preference Dividend

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Cost of debt = Kd =

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Exam information

The exam is a three-hour paper containing four compulsory 25 mark questions. There will be a mixture of
calculations and discussion and the examiner's aim is to cover as much of the syllabus as possible.

Additional information

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o

The Study Guide provides more detailed guidance on the syllabus.

December 2012
NPV; ROCE; interest rates in the economic environment

2

Changes in credit policy; trade receivables management; cash management

3

WACC, interest rate risk; convertible bonds

4

Share valuations; debt valuations; gearing and financial risk

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1

This paper is Mock Exam 3 in this Kit.

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June 2012
1

NPV; investment appraisal

38

2

Working capital management; ratios

3

SMEs; Islamic finance, foreign exchange management

78

4

Investment appraisal; debt finance; risks

61

dy
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18

as
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Examiner's comments. The overall performance in June 2012 was not as good as had been hoped. Most
candidates answered the four compulsory questions and there was little evidence of anyone being time-pressured.
Overall, the highest marks were usually gained on question 1, while the lowest marks were usually gained on
question 4.

Questions in this Kit

NPV; IRR; sensitivity analysis; capital rationing

37

2

Cash operating cycle; receivables factoring

17

3

Business valuation; WACC

69

4

Rights issue; financial analysis; financial objectives

49

ree

1

ac
c

December 2011

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Examiner's comments. Candidates who were well-prepared and who had studied all parts of the syllabus did well
on this paper. Candidates who were not successful may have focused on a small number of topic areas, hoping to
gain most of their marks there. This may explain why many candidates had better marks on questions 1 and 2, than
on questions 3 and 4. It has been said in previous F9 Examiner Reports that each examination paper covers many
areas of the syllabus, so concentrating on one or two parts of the syllabus and giving less attention to other parts
will decrease the likelihood of success.

Revising F9

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/>June 2011

Questions in this Kit

NPV; investment appraisal

25

2

WACC; cost of debt

60

3

Objectives; sources of finance; dividend policy

48

4

Foreign exchange management; working capital management

74

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1

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Examiner's comments. The examination paper looked at many areas of the syllabus and a consideration of
performance on a question by question basis is given below. Successful candidates answered all four compulsory
questions and had prepared well for the examination. Candidates who were not successful tended to have omitted
answers to some parts of the questions, and showed in their answers that there were some parts of the Paper F9
syllabus that they needed to study further. Since many areas of the syllabus are covered in each examination paper,
concentrating on one or two parts of the syllabus and not giving much attention to other parts will decrease the
likelihood of success.

December 2010

Questions in this Kit

NPV; investment appraisal; cost of equity

24

2

Sources of finance; interest rates; market efficiency

47

3

Working capital management

16

4

Business valuation; cost of capital; dividend policy

ate
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1

dy
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59

as
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Examiner's comments. Successful candidates demonstrated their wide understanding of the F9 syllabus, since the
examination paper covered many aspects of the syllabus. As in previous examination diets, some very high marks

were awarded. I hope that unsuccessful candidates have learned from their experience and will be successful at
their next attempt.

Questions in this Kit

1

Expected values; working capital management

15

2

Cost of debt; WACC; gearing; sources of finance

58

3

NPV; asset replacement; IRR

23

4

ac
c

June 2010

Shareholder return; valuation of shares; financial management

68

Revising F9

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Examiner's comments. Overall, performance in June 2010 was encouraging. One pleasing development was a
decrease in the number of scripts gaining very poor marks, indicating that more students had made appropriate
preparation for the examination. Successful candidates were able to demonstrate their wide understanding of the F9
syllabus and it was pleasing to see some very high marks being awarded.

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Questions in this Kit

Lease or buy; NPV; investment decisions

34

2

Cost of debt; CAPM; WACC; dividend growth model; dividend policy

57

3

Ex rights price; EPS; transaction and translation risk; exchange rate hedging

73

4

Role financial intermediaries; forecast financial statements; working capital
policy and management

14

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1

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Examiner's comments. Overall performance in December 2009 showed that while many candidates had prepared
well, a large number of candidates had taken the examination without adequate preparation. There is no substitute
for studying the whole syllabus carefully and in depth. During revision, candidates need to test their degree of
preparation by sitting past papers, under examination conditions if possible, and then taking action to strengthen
areas where they find a need for more skill, knowledge or understanding.

June 2009

Questions in this Kit

Weighted average cost of capital; business valuation; capital structure and the
WACC

67

2

Capital investment decision making process: investment appraisal

31

3

Working capital financing strategy; forecast cash flow; foreign receivables
management

13

4

Financial performance analysis; rights issue; sources of finance

46

dy
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ate
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1

Examiner's comments. This examination paper covered many syllabus areas and candidates who had omitted
some parts of the syllabus from their study may have found it difficult as a consequence.

as
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December 2008

Questions in this Kit

Rights issues; business valuation; agency problem

66

2

Interest rate risk; overtrading; factoring

77

3

WACC; investment appraisal; CAPM

30

4

Debt finance; debt valuation; exchange rate risk

72

ac
c

1

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ree

Examiner's comments. The examination paper was seen to have a good balance between calculation and
discussion, as well as a good coverage of the syllabus. Unsuccessful candidates may have prepared poorly for the
examination. This examination paper covered many areas of the syllabus and tended to be difficult for candidates
who had omitted some sections of the syllabus from their study. Most answers were reasonably well presented,
with very few scripts being drawn to the examiner’s attention as difficult to read or difficult to follow.

Revising F9

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Questions in this Kit

Weighted average cost of capital: Calculation; discussion; comparison of
CAPM with divided growth model

56

2

Business valuation: Dividend growth model calculation; rights issue pricing;
P/E ratio method; EMH; debt v equity finance

65

3

Working capital: Discussion of level of investment; accounts receivable
management; calculation using ratios; EOQ

12

4

Investment appraisal: Calculations of NPV and IRR; discussion of acceptability
and limitations; shareholder wealth maximisation

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1

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29

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Examiner's comments. Where candidates did not reach a pass standard, the main reason was a lack of preparation
or a lack of understanding. Students should remember that all parts of the syllabus are examinable and producing
answers with very little discussion is unwise. It is good exam practice to present answers clearly as this helps the

marker.

December 2007

Questions in this Kit

Business valuation; convertible bond valuation; efficient market hypothesis

64

2

Investment appraisal: Calculations of NPV and IRR; risk and uncertainty

28

3

Sources of finance: Dividend policy; debt finance; rights issue; operating lease

45

4

Working capital management: Objectives; EOQ; accounts receivable; hedging
payables

11

dy

m

ate
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1

as
tu

Examiner's comments. There was little evidence of any time pressure and some candidates scored very high marks.
Failure to pass the exam appeared generally to be associated with a lack of preparation and revision, with some
candidates producing very short answers, or answers with some calculations but with very little discussion. It was
good to see many candidates providing clearly labelled workings and well laid-out calculations in their answers.

Pilot paper

Questions in this Kit

Weighted average cost of capital: Calculation; discussion; ratio analysis

55

2

Foreign currency: Risk; forecasts; forward market; money market hedge;
futures contract

71

3

Working capital: Evaluation of credit policy; Miller-Orr; accounts receivable
management; funding policy

10

4

Investment appraisal: Calculations of NPV and ROCE; strengths and
weaknesses of IRR

22

Revising F9

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Analysis of past papers

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The table below provides details of when each element of the syllabus has been examined and the question number
and section in which each element appeared.
Dec
2012

June
2012

Dec
2011

June
2011

FINANCIAL MANAGEMENT FUNCTION
Nature & purpose
Objectives

1

Stakeholders
FINANCIAL MANAGEMENT ENVIRONMENT

2

Economic environment

3

Financial markets and institutions

1c

WORKING CAPITAL MANAGEMENT
Management
Funding strategies
INVESTMENT APPRAISAL

2a, c

2c

2b

Non-discounted cash flow techniques

1b

8, 9

Discounted cash flow techniques

1a

10

Risk and uncertainty

11

Specific investment decisions
BUSINESS FINANCE
Sources of short-term finance

12

Sources of long term-finance

13

Dividend policy

14

Finance for SMEs
COST OF CAPITAL

as
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12

dy
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7

2a,b,d

15

Calculation

16

Gearing (capital structure)

3a

2a-d

Dec
2009

June
2009

3a,b

4a

4a

4a

3a,b,
c,d

1a,b,c

4b

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6

4c,d

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1

4, 5

June
2010

4c

3a

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1

Dec
2010

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Covered
in Text
chapter

3a, b

3c

4c

3a,b

1b

1a, b

1a,b

1a,b

1c

1c

1c

1a

1d

2a,b
3a,b

1a,b

3c

1d,2b

3c

3d

4b,d

2b,c

4a
3b, c

4c, d

4a,b

3b

2a,b

3c

4d

3c

2a

1c,
4b,c

3d

2c

2d

4b,c
2d

2a

2a,b,c

1a

2b,c

1c

4b

1b

ac
c

BUSINESS VALUATIONS
17

Valuation of shares

17

Valuation of debt

18

Efficient market hypothesis / practical

considerations

4a, b

4a, b

4c

3a,b

4a
2b
2c

ree

RISK MANAGEMENT

Causes of interest rate / exchange rate
fluctuations

19

Hedging foreign currency risk

20

Hedging interest rate risk

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19

4a
3d, e

3c
3d

3c

Revising F9

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Useful websites

The websites below provide additional sources of information of relevance to your studies for Financial
Management.



www.accaglobal.com



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ACCA's website. The students’ section of the website is invaluable for detailed information about the
qualification, past issues of Student Accountant (including technical articles) and interviews with examiners.
www.bpp.com

Our website provides information about BPP products and services, with a link to the ACCA website.
www.ft.com

log



This website provides information about current international business. You can search for information and
articles on specific industry groups as well as individual companies. (Note: Subscription required)
www.economist.com

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

Here you can search for business information on a week-by-week basis, search articles by business subject

and use the resources of the Economist Intelligence Unit to research sectors, companies or countries.
(Note: Subscription required for some content)


www.invweek.co.uk



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This site carries business news and articles on markets from Investment Week and International Investment.
www.pwcglobal.com/uk

The PricewaterhouseCoopers website includes UK Economic Outlook.
www.cfo.com
Good website for financial officers.


www.bankofengland.co.uk

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

This website is useful for sourcing Bank of England publications.


www.yieldcurve.com

Revising F9

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A useful website for research and articles on such areas as interest rate derivatives.

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Planning your question practice

We have already stressed that question practice should be right at the centre of your revision. Whilst you will spend
some time looking at your notes and Paper F9 Passcards, you should spend the majority of your revision time
practising questions.
We recommend two ways in which you can practise questions.

Use BPP Learning Media's question plan to work systematically through the syllabus and attempt key and
other questions on a section-by-section basis



Build your own exams – attempt questions as a series of practice exams

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

BPP Learning Media's question plan

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These ways are suggestions and simply following them is no guarantee of success. You or your college may prefer
an alternative but equally valid approach.

Step 1

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The BPP Learning Media plan below requires you to devote a minimum of 40 hours to revision of Paper F9. Any

time you can spend over and above this should only increase your chances of success.
Review your notes and the chapter summaries in the Paper F9 Passcards for each section of the
syllabus.

Answer the key questions for that section. These questions have boxes round the question number

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Step 2

in the table below and you should answer them in full. Even if you are short of time you must attempt
these questions if you want to pass the exam. You should complete your answers without referring to
our solutions.

Step 3

Attempt the other questions in that section. For some questions we have suggested that you prepare

Attempt Mock exams 1, 2 and 3 under strict exam conditions.

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Step 4

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answer plans or do the calculations rather than full solutions. Planning an answer means that you
should spend about 40% of the time allowance for the questions brainstorming the question and
drawing up a list of points to be included in the answer.

Planning your question practice

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Syllabus section

2012
Passcards
chapters

Questions
in this Kit

1-3

2

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Done



Comments

Revision period 1
Financial
management

Answer in full.

sp
o

More valuable practice at combining ratios with
discussion.
3

Prepare an answer plan as this question covers a
number of important areas.

Revision period 2
4

5

Do the calculations and prepare an answer plan for the
discussion parts.

Inventory
management

5

9

Answer in full. This is an old syllabus working capital
management question.

14

Answer in full. This is the working capital management
question from December 2009.

15

Answer in full. This is the working capital management
question from June 2010.

10

Answer in full.

11

This is the working capital management question from
the Pilot Paper.
Answer in full.

12

This is the working capital management question from
December 2007.
Answer in full.

6

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Cash management

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Revision period 3

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Working capital
management

This is the working capital management question from
June 2008.

Revision period 4
7-10

19

23

Do this question if you feel you need practice at NPV
techniques.
Answer in full.

27

The investment appraisal question from December
2009.
Answer in full.

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21

28
29

This question test your knowledge of risk appraisal.
Answer in full.
The investment appraisal question from June 2007.
Answer in full.
The investment appraisal question from June 2008.

30

Answer in full.
The investment appraisal question from December
2008.

Planning your question practice

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Do this question if you feel you need practice at basic
investment appraisal techniques.

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Investment
appraisal

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