CIMA F3 Financial Strategy CIMAPRA19-F03-1 Exam Questions in PDF

Free CIMA CIMAPRA19-F03-1 Dumps Questions (page: 1)

CORRECT TEXT

A venture capitalist invests in a company by means of buying:

· 9 million shares for $2 a share and

· 8% bonds with a nominal value of $2 million, repayable at par in 3 years' time.

The venture capitalist expects a return on the equity portion of the investment of at least 20% a year on a compound basis over the first 3 years of the investment.

The company has 10 million shares in issue.

What is the minimum total equity value for the company in 3 years' time required to satisify the venture capitalist's expected return?

Give your answer to the nearest $ million.

  1. 34, 35, 34000000, 35000000.

Answer(s): A



CORRECT TEXT
A listed company is planning to raise $21.6 million to finance a new project with a positive net present value of $5 million. The finance is to be raised via a rights issue at a 10% discount to the current share price. There are currently 100 million shares in issue, trading at $2.00 each.

Taking the new project into account, what would the theoretical ex-rights price be?

Give your answer to two decimal places.

  1. 2.02, 2.03

Answer(s): A



Which THREE of the following are likely to be strategic reasons for a horizontal acquisition?

  1. Reduction of risk by building a larger portfolio
  2. Acquisition of an undervalued company
  3. To achieve economies of scale
  4. To secure key parts of the value chain
  5. Reduction of competition

Answer(s): B,C,E



A company plans to raise $12 million to finance an expansion project using a rights issue.

Relevant data:

· Shares will be offered at a 20% discount to the present market price of $15.00 per share.

· There are currently 2 million shares in issue.

· The project is forecast to yield a positive NPV of $6 million.

What is the yield-adjusted Theoretical Ex-Rights Price following the announcement of the rights issue?

  1. $16.00
  2. $14.00
  3. $9.00
  4. $11.00

Answer(s): A



Company T is a listed company in the retail sector.

Its current profit before interest and taxation is $5 million.

This level of profit is forecast to be maintainable in future.

Company T has a 10% corporate bond in issue with a nominal value of $10 million.

This currently trades at 90% of its nominal value.

Corporate tax is paid at 20%.

The following information is available:

Which of the following is a reasonable expectation of the equity value in the event of an attempted takeover?

  1. $32.0 million
  2. $41.6 million
  3. $65.0 million
  4. $50.2 million

Answer(s): B



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