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F3 Financial Strategy Questions 81–88 (page: 12)

Which THREE of the following are benefits of integrated reporting?

Which THREE of the following long term changes are most likely to increase the credit rating of a company?

A company's main objective is to achieve an average growth in dividends of 10% a year.  In the most recent financial year:

Sales are expected to grow at 8% a year over the next 5 years.  Costs are expected to grow at 5% a year over the next 5 years. 
What is the minimum dividend payout ratio in 5 years' time that would allow the company to achieve its objective?

A company has announced a rights issue of 1 new share for every 4 existing shares. 
Relevant data:   
* The current market price per share is $10.00.   
* Rights are to be issued at a 20% discount to the current price.
  
* The rate of return on the new funds raised is expected to be 10%.   
* The rate of return on existing funds is 5%.
What is the yield-adjusted theoretical ex-rights price?
Give your answer to two decimal places.

An aerospace company is planning to diversify into car manufacturing.
Relevant data:

What is the the cost of equity to be used in the WACC for the project appraisal?
Give your answer in percentage, as a whole number.

When valuing an unlisted company, a P/E ratio for a similar listed company may be used but adjustments to the P/E ratio may be necessary.
Which THREE of the following factors would justify a reduction in the proxy p/e ratio before use? 

A project requires an initial outlay of $2 million which can be financed with either a bank loan or finance lease. The company will be responsible for annual maintenance under either option.
The tax regime is:   
* Tax depreciation allowances can be claimed on purchased assets.   
* If leased using a finance lease, tax relief can be claimed on the interest element of the lease payments and also on the accounting depreciation charge. The trainee management accountant has begun evaluating the lease versus buy decision and has produced the following dat a.  He is not confident that all this information is relevant to this decision.

Using only the relevant data, which of the following is correct?

A large, listed company is planning a major project that should greatly improve its share price in the long term. These plans require a significant capital cost that the company plans to finance by debt. All of the debt options being considered are for the same duration of time.
Which of the following sources of debt finance is likely to be the most expensive for the company over the full term of the debt?