This is from the morning session of book 6. The first exam…question 19 and 20 We know FCFF= 87 728$…but how the fuck do they get the number in question 20!!! i mean i know how to calc FCFE from FCFF, and the difference insint that… FCFE= FCFF - Int*(1-tax)+ Net borrowing…tHAT DOESNT GIVE THE ANSWER…even if i include principal repayment and notes payable issued…can somebody help me… Warning: did i miss something very simple???
Read the question carefully…they are asking how much FCFF exceeded FCFE.
I had trouble with that one too. They list net borrowing as $27,409 but it’s actually -$27,409 because they borrowed $5,866 and repaid $33,275.
yea net borrowings is negative…because you are actually net paying out money back.
I agree - this question is inherently wrong!! Many more inconsistencies like that in the Qbank!
The info was on the Income Statement & additional info section, I fail to see how it is “inherently wrong”.
it’s inherently conflicting. the individual line items are correct, but “net borrowing” being positive implies that they borrowed money. That’s wrong.
This question was absolutely infuriating, it almost like schweser creates so many question between the Q-Bank, Book 6 & 7, etc. that they run out of things to ask and put together ridiculous questions like this.
The way I get net borrowing straight is by expanding it to repayments plus new borrowing. So FCFF-(INTx(1-tax)) + net borrowing would mean: FCFF-(INTx(1-tax)) - repayments + new issuance
ok perfect…i get it i really hate this Schwesersdsrseerwse crap
agreed, that question was worded horribly. it would be nice if Schweser/CFAI focused more on testing knowledge of the material rather than trying to trip you up with tricky/vague/inconsistent wording. wishful thinking.
I added the net borrowing with the debt issuance and repayment…effectively doubling it. not sure why they would include the gross and net numbers…lesson learned.