CIMA Related Exams
F3 Exam
The CIMA F3 exam syllabus encompasses a wide range of financial strategy concepts, including:
The CIMA F3 and P3 exams are part of the Strategic Level of the CIMA (Chartered Institute of Management Accountants) qualification, but they focus on different areas:
A company has stable earnings of S2 million and its shares are currently trading on a price earnings multiple {PIE) of 10 times. It has10 million shares in issue.
The company is raising S4 million debt finance to fund an expansion of its existing business which is forecast to increase annual earnings straight away by 25% and then remain at that level for the foreseeable future. The corporation tax rate is 20%. It is expected that the P/E will reduce to 8 times over the next year.
What is the most likely change in shareholder wealth resulting from this plan?
A company's Board of Directors wishes to determine a range of values for its equity.
The following information is available:
Estimated net asset values (total asset less total liabilities including borrowings):
• Net book value = $20 million
• Net realisable value = $25 million
• Free cash flows to equity = $3.5 million each year indefinitely, post-tax.
• Cost of equity = 10%
• Weighted Average Cost of Capital = 7%
Advise the Board on reasonable minimum and maximum values for the equity.
A company needs to raise $20 million to finance a project.
It has decided on a rights issue at a discount of 20% to its current market share price.
There are currently 20 million shares in issue with a nominal value of $1 and a market price of $5 per share.
Calculate the terms of the rights issue.