[jeff]

Welcome to the Q1 2016 CPA Exam Study Group for BEC.

Some BLITZ videos to help your exams: https://www.another71.com/ninja-blitz

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

[FAR_WARS]

1- Moniker you are correct, but can you show your work? I am having trouble understanding Becker's solution.

20(1.05*1.05*1.05)
= 23.1525 Div in 3 yrs
/(.1-.05)
=$463

Why 20(1.05 * 1.05 * 1.05) instead of (20 * 1.05 * 1.05)?

FAR- 80
BEC- 75
AUD- 78
REG- ?

[oxleyd]

FAR - (4/11/2016)
REG - (5/28/2016)
AUD - 65 (2/1/2016)
BEC - (7/11/2016)

[monikernc]

MaLoTu – halfway down page is the Risk Appetite doc with good definitions

https://www.coso.org/guidance.htm

farwars, i will be back with calcs – want to get back to desk rather than from phone

FAR 7/25/15 76!
AUD 10/30/15 93
BEC 2/27/16 82
REG 5/23/16 88!
Ninja Book and MCQ and the forum - all the way!!!
and a little thing i like to call, time and effort!
if you want things to change, you have to do something different

[Anonymous]

Back from the exam. Here is my summary:

Testlet 1: not bad. Everyone on this forum is prepared for testlet one (at least the version I got).

Testlet 2: WTF WAS THAT? I flagged 10 – 12 questions (out of 24!)…I flagged them because 1) I had never heard of the concept and had no idea 2) had heard of the concept and was choosing between two answers 3) it was a calculation and I couldn't remember how to solve it.

Testlet 3: more similar to testlet one.

Overall, I felt that there was an appropriate amount of calculations. There were IT questions but not an overload. The IT questions were either basic or touched upon topics not addressed in my review material. COSO was not bad at all (but my background is internal controls so I might have an advantage).

The WC were not bad. Two topics I knew pretty well, the third not so much, so I hope that one was the pretest. 🙂

Overall not sure how I did. I am grateful to have a break…let the countdown begin, and good luck to all of you that are testing this weekend. You can do it!

[FAR_WARS]

Risk appetite is the amount of risk, on a broad level,
an organization is willing to accept in pursuit of value.
Each organization pursues various objectives to add
value and should broadly understand the risk it is
willing to undertake in doing so

FAR- 80
BEC- 75
AUD- 78
REG- ?

[monikernc]

farwars – q1 dividend in 3 years/(discount rate – growth rate)

numerator: 20* (1.05)^3 = 23.15 – you do 3 years growth on the dividend because the 20 was the last dividend and you need the next dividend plus 2 more years.

denominator: .10-.05 = .05

23.15/.05 = $463

q2 PEG = (P/E)/Annual Growth Rate and to solve for Price = Earnings/(PEG*Growth Rate)
4*.025 = .10
Price = $10/.10 = $100

FAR 7/25/15 76!
AUD 10/30/15 93
BEC 2/27/16 82
REG 5/23/16 88!
Ninja Book and MCQ and the forum - all the way!!!
and a little thing i like to call, time and effort!
if you want things to change, you have to do something different

[MaLoTu]

Thanks, Erika, Enjoy the break!!! Hopefully it will be an eternal break, lol, since it is your last exam!
I am praying that we all get passes! Based on your previous scores I wouldn't doubt a pass 😉

[monikernc]

Erika, good luck. How did you do for time? I am still worried my pace is not quick enough to do all of this in 3 hours.

based on yours and the feedback of others, i am starting to wonder if all the pretest questions are in testlet 2.

i hope i breathe this time – if not, they may have to call for that ambulance this time.

FAR 7/25/15 76!
AUD 10/30/15 93
BEC 2/27/16 82
REG 5/23/16 88!
Ninja Book and MCQ and the forum - all the way!!!
and a little thing i like to call, time and effort!
if you want things to change, you have to do something different

[FAR_WARS]

2)

Choice “b” is correct. Projected stock price would be approximately $102.50, computed as follows:

Po= PEG x E, x G
Po= 4x($10×1.025)x2.5
Po= 4 x $10.25 x 2.5
Po= $102.50

FAR- 80
BEC- 75
AUD- 78
REG- ?

[monikernc]

thanks farwars. i didn't compound.

where did you get these? i don't recall these concepts at all

FAR 7/25/15 76!
AUD 10/30/15 93
BEC 2/27/16 82
REG 5/23/16 88!
Ninja Book and MCQ and the forum - all the way!!!
and a little thing i like to call, time and effort!
if you want things to change, you have to do something different

[FAR_WARS]

Slapped in at the end of becker.

PEG = [(P/E)]/G
4 = [(P/(10*1.025)] / .025

P= $102.5!

FAR- 80
BEC- 75
AUD- 78
REG- ?

[FAR_WARS]

1)

A company with $4.8 million in credit sales per year plans to relax its credit standards, projecting that this will increase credit sales by $720,000. The company’s average collection period for new customers is expected to be 75 days, and the payment behavior of the existing customers is not expected to change. Variable costs are 80% of sales. The firm’s opportunity cost is 20% before taxes. Assuming a 360-day year, what is the company’s benefit (loss) from the planned change in credit terms?

a. $0
b. $28,800
c. $144,000
d. $120,000

2)
————————————–Web Master———Softidee
Average monthly purchases–$25,000————-50,000
Credit terms———————–2/10, net 30——–5/10, net 90

CyberAge has been paying all of its bills on the last day of the payment period, thus forfeiting
all supplier discounts. Assuming a 360-day year and that CyberAge continues paying on the last day of the credit period, the company’s weighted-average annual interest rate for trade credit (ignoring the effects of compounding) for these two vendors is

a. 27.0%
b. 25.2%
c. 28.0%
d. 30.2%

FAR- 80
BEC- 75
AUD- 78
REG- ?

[Anonymous]

@MaLoTu thanks so much!

@monicker I finished with 20 minutes left. This is the only exam where I felt rushed. I didn't even recheck a single calculation as I was worried that testlet 3 would be just as bad as testlet 2, and I wanted an hour for the WCs.

In terms of WC, I ended up using an entire hour. I could have done it in less but I would have been frazzled. Like you, I have been out in the workforce for a while and written a number of memos, reports, etc. so I wasn't too worried about the WCs. (And it turns out the exam is just like real life: when you have no idea just BS your way through and it will probably be all right.) 🙂

[monikernc]

farwars, i have no clue on the 1st one.

second one:
25/75*.02/.98*360/20 = .12245
50/75*.05/.95*360/80 = .15789

.12245+.15789 = .28034 or 28%

FAR 7/25/15 76!
AUD 10/30/15 93
BEC 2/27/16 82
REG 5/23/16 88!
Ninja Book and MCQ and the forum - all the way!!!
and a little thing i like to call, time and effort!
if you want things to change, you have to do something different

[FAR_WARS]

1) (d)

The requirement is to calculate the benefit or loss from changing credit policy. Answer (d) is correct because
the benefit is equal to the contribution margin received from the additional sales minus the cost of having incremental funds tied up in accounts receivable. The benefit from an increase in sales is equal to $144,000 ($720,000 sales × 20% contribution margin). The interest opportunity cost is equal to 75 days’ interest on the variable portion of sales, or ($720,000 × 80%)/360 × 75 × 20% interest = $24,000. Therefore, the net benefit is equal to $120,000 ($144,000 – $24,000).

2) (c)

Avg Amts Borrowed:
24.5 * (20/360) = 1.36
47.5 * (80/360) = 10.5

Annual Rates:
(.5/24.5) * 360/(30-10) = .367347
(2.5/47.5) * 360/(90-10) = .236842

WA rate:
(1.36 * .367347) + (10.5 * .236842)
=25.2%

FAR- 80
BEC- 75
AUD- 78
REG- ?

[Author]

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