ACCA FM study plan

Compute NPV, IRR, payback and discounted payback for multi-year projects from a given cash-flow schedule, laying out workings in the standard ACCA proforma with discount factors shown at each year.

Convert real cash flows to nominal (and vice versa) and select the consistent discount rate, applying the half-year lag convention for tax-allowable depreciation.

Evaluate a lease-versus-buy decision and an asset-replacement decision using equivalent annual cost.

Rank competing projects under single-period capital rationing using the profitability index, and distinguish divisible from indivisible project selection.

Explain why NPV is theoretically superior to IRR, identifying non-conventional cash flows and multiple-IRR situations and reconciling conflicting rankings.

Assess project risk by calculating sensitivity margins on each input, expected NPV from a probability distribution, and adjusted payback under scenario analysis.

Calculate the cost of equity using both the dividend growth model and the CAPM, and state the assumptions behind each.

Compute the after-tax cost of debt for irredeemable and redeemable debt, using the trial-and-error plus interpolation method where the IRR approach is required.

Calculate a weighted average cost of capital using market values of equity and debt rather than book values, and critique book-value weighting.

Ungear and regear asset betas to derive a project-specific or divisional cost of capital, and justify when a marginal cost of capital should replace the company WACC.

Discuss the traditional and Modigliani-Miller views of gearing, with and without tax, and show the effect of a change in gearing on WACC.

Value a company's equity using the net asset, dividend valuation, P/E and earnings-yield methods, and state the circumstances in which each is appropriate.

Value debt and preference shares from their cash flows and combine with equity values to arrive at an enterprise value.

Perform a discounted cash-flow valuation of a target company, including a defensible growth assumption, a post-tax discount rate and a sensitivity on the terminal value.

Calculate and interpret the cash operating cycle from a set of ratios, and quantify the cash released by shortening each component by a stated number of days.

Evaluate a proposed change in receivables policy, including an early-settlement discount, using incremental cost-benefit analysis.

Apply the economic order quantity model to inventory and compare its total cost with a bulk-discount alternative.

Select between Baumol and Miller-Orr cash models and compute the optimal cash balance or spread under each.