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F3 Financial Strategy Questions 169–176 (page: 23)

Which THREE of the following are the most likely exit routes that apply to a venture capitalist?

Which THREE of the following statements are correct?

A listed company is financed by debt and equity. If it increases the proportion of debt in its capital structure it would be in danger of breaching a debt covenant imposed by one of its lenders.
The following data is relevant:

The company now requires $800 million additional funding for a major expansion programme. 
Which of the following is the most appropriate as a source of finance for this expansion programme?

Company Z has identified four potential acquisition targets: companies A, B, C and D.   Company Z has a current equity market value of $580 million. The price it would have to pay for the equity of each company is as follows:  

Only one of the target companies can be acquired and the consideration will be paid in cash. The following estimations of the new combined value of Company Z have been prepared for each acquisition before deduction of the cash consideration:
Ignoring any premium paid on acquisition, which acquisition should the directors pursue?

The ex div share price of a company's shares is $2.20.
An investor in the company currently holds 1,000 shares.
The company plans to issue a scrip dividend of 1 new share for every 10 shares currently held.
After the scrip dividend, what will be the total wealth of the shareholder?
Give your answer to the nearest whole $.
 .

An all equity financed company reported earnings for the year ending 31 December 20X1 of $5 million.
One of its financial objectives is to increase earnings by 5% each year. In the year ending 31 December 20X2 it financed a project by issuing a bond with a $1 million nominal value and a coupon rate of 7%. The company pays corporate income tax at 30%.
If the company is to achieve its earnings target for the year ending 31 December 20X2, what is the minimum operating profit (profit before interest and tax) that it must achieve?

Which of the following statements about IFRS 7 Financial Instruments: Disclosures is true?

A profitable company wishes to dispose of a loss-making division that generated negative free cashflow in the last financial year. The division requires significant new investment to return it to profitability.
Which of the following valuation approaches is likely to be the most useful to the company when negotiating the sales price?