CIMA F3 Exam With Confidence Using Practice Dumps

11.20, 11.21-for-4 rights at 20% discount:Issue price = 10×0.8=$810 \times 0.8 = \$810×0.8=$8.Take a “block” of 4 old shares:Current value = 4×10=404 \times 10 = 404×10=40.New funds raised = 8 → invested at 10%.Current return on existing funds = 5%.Earnings on 4 old shares: 40×5%=240 \times 5\% = 240×5%=2.Earnings on new funds: 8×10%=0.88 \times 10\% = 0.88×10%=0.8.Total earnings after issue = 2.8 on 5 shares.EPS after issue = 2.8/5=0.562.8 / 5 = 0.562.8/5=0.56.Required return still 5%, so value of package: 2.8/0.05=562.8 / 0.05 = 562.8/0.05=56.Price per share = 56/5=11.256 / 5 = 11.256/5=11.2.Yield-adjusted TERP = $11.20

$11.20

8, 8000000Comprehensive and Detailed Step-by-Step Explanation (Based on CIMA F3: Financial Strategy Principles):In CIMA F3, the valuation of acquisition synergies is based on the principle that synergy equals the increase in combined firm value that arises because the acquiring company can improve the target firm's performance or efficiency. One of the core valuation tools taught in the syllabus is the Price/Earnings (P/E) multiple method, where the value of a company is determined by multiplying its earnings by the appropriate industry or company-specific P/E ratio.The scenario states that Company A believes it can improve Company B’s performance sufficiently so that B’s earnings should attract Company A’s higher P/E ratio rather than its own lower ratio. This is a classic example of an “earnings uplift synergy,” discussed frequently in F3 under the section covering mergers, acquisitions, and revaluation synergies.Step 1 — Revalue Company B using Company A's P/E ratioCompany B’s current earnings:-Exhibit (a073f387-824e-4a5b-a1c6-4d72404346a7)-Company A’s P/E ratio (to be applied):Expected post-acquisition value of Company B:Step 2 — Compare with current market value of Company BCurrent market capitalisation of Company B:-Exhibit (bee41617-72c3-4f61-b9c2-dc66ad2e046d)-Step 3 — Calculate synergySynergy represents the additional value created above B’s current standalone value:-Exhibit (ddc25633-cc16-4412-9577-0f5b4421b393)-This aligns with CIMA F3’s framework: synergy is calculated as the difference between the post-acquisition value (based on improved performance and higher multiples) and the pre-acquisition market value.