F3 Exam Dumps : Financial Strategy

An all equity financed company plans an issue of new ordinary shares to the general public to raise finance for a new project

The following data applies:

• 10 million ordinary shares are currently in issue with a market value of S3 each share

• The new project will cost S2.88 million and is expected to give a positive NPV of S1 million

• The issue will be priced at a AaA discount to the current share price.

What gam or loss per share will accrue to the existing shareholders?

KKL is a listed sports clothing company with three separate business units. KKL is seeking to sell TT’, one of these business units

TTP cwns a new. brand of trail running shoes that have Droved hugely popular with lone distance runners. The management team of TTP are frustrated by the constraints imposes b/ KKL in managing tie brand and developing. the bus ness and they believe that TTF has huge growth potential.

The management team of TTP have approached KKL with a proposal to purchase 1~P through a management layout (MDO). KKL has accepted this proposal as TTP has not proved to be a good fit' with the rest of the business and has agreed on the selling price.

Which THREE of the following factors a-e mast Likely to affect the success of the MBO?

The Board of Directors of a listed company have decided that it needs to increase its equity capital to ensure it is in a more stable financial position.

The shareholder profile is a mix of institutional and individual small shareholders.

The board is considering either:

   • A scrip dividend 

   • A zero dividend

Which THREE of the following would be considered disadvantages of a scrip dividend compared to a zero dividend?