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  #1  
Old 01-12-2019, 03:45 PM
shixuzheng shixuzheng is offline
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Join Date: Aug 2015
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Default EOM1 - side questions

1. Should we remove the entire rows for expense, or should we simply zero out the values for the cost we want to remove?

2. Do we need to include the original worksheets in the submission?
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  #2  
Old 01-12-2019, 04:03 PM
shixuzheng shixuzheng is offline
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Also, can someone tell me if it's reasonable to remove all the demolition cost? In the memorandum provided, there is a statement saying that "Offsetting these savings, however, are closure and reclamation costs that we would assume as part of the purchase." It seems like those cost will be still be absorbed by Can-do according to the statement, but intuitively I will think Can-do will re-open the South Face Mine, so there is no need for those demolition?
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  #3  
Old 01-13-2019, 01:53 AM
shixuzheng shixuzheng is offline
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Sorry I just keep having second guesses.
For the modified budget, should I adjust expense in every calendar year or should I simply apply all the discount and inflation in the total column.

Do we even need the modified FAS budget for submission?
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  #4  
Old 01-13-2019, 02:30 PM
Ang88 Ang88 is offline
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[quote=shixuzheng;9515056]1. Should we remove the entire rows for expense, or should we simply zero out the values for the cost we want to remove?

2. Do we need to include the original worksheets in the submission?[/QUOTE

Hi!

1. I have already answered to you.

2. Yes. We must include them. At least I did it this way.
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  #5  
Old 01-13-2019, 02:37 PM
Ang88 Ang88 is offline
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Quote:
Originally Posted by shixuzheng View Post
Also, can someone tell me if it's reasonable to remove all the demolition cost? In the memorandum provided, there is a statement saying that "Offsetting these savings, however, are closure and reclamation costs that we would assume as part of the purchase." It seems like those cost will be still be absorbed by Can-do according to the statement, but intuitively I will think Can-do will re-open the South Face Mine, so there is no need for those demolition?
I'm not sure what is right and what is wrong. I think that South Face Mine will not re-open. It is not clear. Do whatever you think and support it. Personally I did not excluded that cost.
I am considering another cost called "Employee Housing Buy-back". I can't understand what exactly is that. I have never heard something like that in my country and I'm still confused. Please can explain me what is it with an example?

Thank you in advance.

Quote:
Originally Posted by shixuzheng View Post
Sorry I just keep having second guesses.
For the modified budget, should I adjust expense in every calendar year or should I simply apply all the discount and inflation in the total column.

Do we even need the modified FAS budget for submission?
I am not sure what exactly are you trying to say. I believe that except from removing (or change the values) some cost lines we do not have to (or better we must not) change anything else neither in Modified Budget nor the Modified Budget Summary.
You will "play" with Net Value of Acquisition sheet. Every cost and result is connected to this sheet. At least this is what I think.

Last edited by Ang88; 01-13-2019 at 02:47 PM..
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  #6  
Old 01-13-2019, 03:18 PM
shixuzheng shixuzheng is offline
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Employee House Buyback- From my basic understanding, it seems like South Face Mine sold houses to their employees, and now since they are laying off employees they need to buy back the property they sold (there must be a contract or something specifying the terms). I personally will include the cost in the budget. I only removed 2 inspections and 1 severance and have a inflation around 2.8%.
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  #7  
Old 01-13-2019, 03:27 PM
shixuzheng shixuzheng is offline
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Quote:
Originally Posted by Ang88 View Post

I am not sure what exactly are you trying to say. I believe that except from removing (or change the values) some cost lines we do not have to (or better we must not) change anything else neither in Modified Budget nor the Modified Budget Summary.
You will "play" with Net Value of Acquisition sheet. Every cost and result is connected to this sheet. At least this is what I think.
I am pretty much done with the valuation portion (figuring out inflation rate, and finishing sensitivity test) By the way what did you use as your base scenario? Did you use the equivalent inflation rate and 0 allowance, or did you include the 15% allowance?

My major concern is the Data Summary, Modified Budget, and Modified Budget Summary.

Data Summary: what difference does it have from the original 2005-2006 Mgmt Budget Summary?

Modified Budget: Do I simply zero out the items I remove? Do I also adjust the total column at the end with formula that discount all cash flow with the inflation rate and 6% discount rate? Do I eliminate the 15% allowance? (Do we include allowance in base scenario after all?
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  #8  
Old 01-13-2019, 03:46 PM
Ang88 Ang88 is offline
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Quote:
Originally Posted by shixuzheng View Post
Employee House Buyback- From my basic understanding, it seems like South Face Mine sold houses to their employees, and now since they are laying off employees they need to buy back the property they sold (there must be a contract or something specifying the terms). I personally will include the cost in the budget. I only removed 2 inspections and 1 severance and have a inflation around 2.8%.
Oh ok. Thank you for your kind help! I think I got it. It confused me a lot.
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  #9  
Old 01-13-2019, 03:58 PM
shixuzheng shixuzheng is offline
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Join Date: Aug 2015
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Quote:
Originally Posted by Ang88 View Post
Oh ok. Thank you for your kind help! I think I got it. It confused me a lot.
This module is really vague and I hate it so much.
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  #10  
Old 01-13-2019, 04:14 PM
Ang88 Ang88 is offline
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Join Date: Aug 2016
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Quote:
Originally Posted by shixuzheng View Post
I am pretty much done with the valuation portion (figuring out inflation rate, and finishing sensitivity test) By the way what did you use as your base scenario? Did you use the equivalent inflation rate and 0 allowance, or did you include the 15% allowance?

My major concern is the Data Summary, Modified Budget, and Modified Budget Summary.

Data Summary: what difference does it have from the original 2005-2006 Mgmt Budget Summary?

Modified Budget: Do I simply zero out the items I remove? Do I also adjust the total column at the end with formula that discount all cash flow with the inflation rate and 6% discount rate? Do I eliminate the 15% allowance? (Do we include allowance in base scenario after all?

I have not finished sensitivity tests yet. I wanted to be sure about "Employee House Buyback" before I proceed, since I did not want to redo the tests.

However I have decided to use as base scenario the discount rate (6% given), the inflation rate I found (~3%) and the contingency rate (15%). I am not sure if I have to use both inflation rate and contingency rate. I have read a lot of posts here and I have seen all versions (infl 0%, contin 15% or infl x%,contin 0% or infl x%,contin 15%).

I am not sure which is right. I think that Contingency is not a substitute of x% inflation. We are instructed to use it like that, in order to find inflation, but they are not equivalent by any definition.
However I do not want to influence you.

Regarding Data Summary, it confused me too and I haven't started it yet. I will reply to you later.

Regarding Modified Budget: I zero out the items I removed. However, someone could just delete them. I don't think that you have to touch the formula in last column. Personally, I did not touch any formula. Only change the values of the items to zero. All my calculations are in Net Value of Acquisition. The PV per line item is in Modified Budget Valuation Detail sheet. So I did not touch anything.
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