[jeff]

Post by Another71.

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Jeff Elliott, CPA (KS) | Another71 | NINJA CPA | NINJA CMA | NINJA CPE

[Anonymous]

I calculate the answer as B. But I'm not sure how to do the float thing.

=15*(.08) / ((15 * 1.01) * (.98))

=1.2/14.847

=8.08%

[Anonymous]

dreamchaser are u using becker? what is the question number for that question? i havent seen it in the hw

[Anonymous]

I am using my last month of Becker before it expires and ninja ten point combo.

[Anonymous]

The answer is B to that question. I did not get it right on my first shot at it. Those type of problems that have all the extra information in them suck..

[JS867_5309]

@DreamChaser – I've started skipping to the end of any problem that looks long. The last sentence is usually the question. If it's a math problem, you can write yourself out the equation then go back to the beginning and weed through all the extra info.

You still have to read the question carefully, because that one could easily have been after-tax and made you calculate the tax savings on the interest payment, but it was simpler than that. A lot of times the AICPA questions set up this huge fact pattern then use it for multiple questions across different exams. The information is all relevant to one question or another, but rarely is it all relevant in one place.

Exam:I'm done 🙂 🙂 🙂
REG - 71 (2/22/14); 67 (4/3/14); 74 (8/29/15); 83 (2/29/16)!!!
BEC - 72 (5/24/14); 85 (1/3/15)!!!!
AUD - 72 (8/23/14); 76 (10/15/14)!!!
FAR - 77 (5/26/15)!!!

Started in 2013 using Kaplan and failed REG, REG, BEC, AUD. Switched to NINJA suite in Sept 2014 and passed AUD...then BEC...then FAR!
REG took 2 tries but I finally got it in too!
I'm a hard convert - Using NINJA method with NINJA video/book/notes/MCQ

Education: Check
Experience: 3 months left! I hit 4 years on May 30 🙂

[Anonymous]

@JS.

Thanks for posting your method. It's much easier than mine. There is no reason to multiply it by the principal (15 million) like I did. So much simpler just to use the rates like you did. Thanks.

[Anonymous]

DreamChase, I feel ya. I hate those questions where there is more info you DONT use than you DO use.

[Anonymous]

i just went throught the becker questions and saw that exact same problem come up where they actually give you the after tax cost of debt and ask you to calculate WACC. Not sure if thats something becker added in thier questions or its a variation of the question to make it more difficult. either way, i didnt know the answer and my exam is in a week!

[JS867_5309]

@DoOver – NP; It's how NINJA explains it and I agree it's much simpler. It also lets you see a lot easier where the costs/numbers come from, because it's so simplified.

Done for the night, but shooting for 60-120 questions tomorrow. It's crunch week, and I feel like a trending score of 81% just isn't gonna do it 🙁 I can't fail AND pass all this before October…

Exam:I'm done 🙂 🙂 🙂
REG - 71 (2/22/14); 67 (4/3/14); 74 (8/29/15); 83 (2/29/16)!!!
BEC - 72 (5/24/14); 85 (1/3/15)!!!!
AUD - 72 (8/23/14); 76 (10/15/14)!!!
FAR - 77 (5/26/15)!!!

Started in 2013 using Kaplan and failed REG, REG, BEC, AUD. Switched to NINJA suite in Sept 2014 and passed AUD...then BEC...then FAR!
REG took 2 tries but I finally got it in too!
I'm a hard convert - Using NINJA method with NINJA video/book/notes/MCQ

Education: Check
Experience: 3 months left! I hit 4 years on May 30 🙂

[Anonymous]

@ dsch9319

WACC isn't as intimidating as it sounds. You just add together two rates (equity and debt financing) based on their weights.

I'm not sure if its the exact same, but with the info in the other problem you would be

=(35/50 * 12%) + (15/50 * 8.08%)

= 8.4% + 2.424%

=10.824% —- (or 10.8% if the debt rate is just 8%)

I think anyway. What is the Becker problem number? (now I'm curious)

I'm not sure if you just use 8% or the 8.08% for WACC. Does anyone else know?

It really doesn't change the answer too much here but I'm wondering if that float rate gets accounted for in WACC as well.

[Anonymous]

ya i think what threw me off for that questions was the fact that it was a premium bond and had flotation costs — didnt see a questions like that in becker. the questions number in becker im talking about is cpa-03385

[Anonymous]

cool thanks. They have an after tax cost debt rate of 7%. (The other problem was pretax). I don't know how to get from the 8.08% to 7% with a 40% tax rate. I tried a few ways, but no luck. I can get the WACC answer if given that debt rate though.

Becker doesn't seem to do too much on that float rate. Thats why I don't really understand it either. Hopefully we won't have to.

Good luck on the 5th. Keep dropping in with questions. That helps me review for sure. I have trouble with Becker ch.4. I can't keep all those terms straight. Hopefully I can work it out by the 13th.

[Anonymous]

thanks ! i just went through chapter 4 today. I read in a few places becker is weak in IT so i supplemented the wiley test bank questions ( there are a ton of them) i went through them once and will probably leave it at that and hope some of it stuck. i highly recommend reviewing the appendix. I did it today for the first time and it covers alot of material that wiley actually focuses on. Im gonna review that throughout this week as well.

[Anonymous]

Whats really killing me is the optional questions for chapter 3. They are positively brutal. Becker does not even cover the calculations for alot of those questions so Im messing up on them

[Anonymous]

I was going to do the optional ch 3. ones tomorrow. I put it off because there were so many and I was trying to get through all 6 chapters by tonight. Thanks for the warning. I can't wait. I'm still trying to finish up Ch. 6 right now. I got about an hour of lecture left. Atleast with Ch6 there are not that many questions.

[Author]

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