CIMA F3 Exam With Confidence Using Practice Dumps

The Senior Management Team of ABC, an owner-managed, capital intensive start-up engineering business, is considering the options for its dividend policy. It has so far been a successful business and is expanding quickly Once in place, the Senior Management Team anticipates that its current investment plans will yield returns for many years to come The first agenda item at every meeting currently concerns arranging and funding new equipment and premises.

Which of the following dividend policies is likely to be the most suitable?

Company P is a large unlisted food-processing company.

Its current profit before interest and taxation is $4 million, which it expects to be maintainable in the future. 

It has a $10 million long-term loan on which it pays interest of 10%.

Corporate tax is paid at the rate of 20%.  

The following information on P/E multiples is available:

Which of the following is the best indication of the equity value of Company P?

A UK company enters into a 5 year borrowing with bank P at a floating rate of GBP Libor plus 3%

It simultaneously enters into an interest rate swap with bank Q at 4.5% fixed against GBP Libor plus 1.5%

What is the hedged borrowing rate, taking the borrowing and swap into account?

Give your answer to 1 decimal place.