CIMA Strategic level F3 Exam Questions and Answers PDF

A company is undertaking a lease-or-buy evaluation, using the post-tax cost of bank borrowing as the discount rate.

Details of the two alternatives are as follows:

Buy option:

   • To be financed by a bank loan

   • Tax depreciation allowances are available on a reducing-balance basis

   • Assets depreciated on a straight-line basis

Lease option:

   • Finance lease

   • Maintenance to be paid by the lessee

   • Tax relief available on interest payments and book depreciation

Which THREE of the following are relevant cashflows in the lease-or-buy appraisal?

For which THREE of the following risk categories does IFRS 7 require sensitivity analysis? 

PYP is a listed courier company. It is looking to raise new finance to fit each of its delivery vans with new equipment to allow improved parcel tracking for customers The senior management team of PYP have decided on a 10-year secured bond to finance this investment-

Which TWO of the following variables are most likely to decrease the yield to maturity of the bond?

An unlisted company:

• Is owned by the original founder and member of their families.
• Is growing more rapidly than other companies in the same industry.
• Pays a fixed annual divided

Which of the following methods would be the most appropriate to value this company’s equity?