CIMA F3 Exam Dumps-Shortcut To Success

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Introduction to CIMA F3: Financial Strategy Exam

For the Strategic Case Study Exam, there are three quantitative measurements: one for each professional designation topic. Only after passing all the Quantitative Examinations for the course, or when accommodation has been granted, may students take the Research Report Exam. Unique to the Research Report Exam is the option for a student to test at home. CIMA F3 exam dumps The F3 course will be taught in two days. The students will also learn how to apply finance to their business, and how you can get paid for studying. Post your thoughts, or keep your money in your pocket. Mobile learning makes preparation for certification less complicated than ever before. Invest your time and effort in preparation and you will be rewarded. People who prepare for the certification in advance. If you are studying, working or just taking time off, then this is the right time to learn finance. Explained in this guide is the process of how you can learn all the basics. Provider of financial solutions for your exam needs. Times and availability may vary.

The market is very dynamic. If you are starting a new company, then this guide will help you to successfully run it. Judge the company's financial condition. We believe that this guide will help you to run your company more efficiently. Wrong advertising will hurt your company. Anytime you need to learn about finance, you're already at the right place. Methods and techniques to use to your advantage. The attribute of your company is very important. Without making money, there is no future for the company. The key to the financial health of a business is the right team. Bind the interest of customers to your business. You can choose the best management team. Element that is needed for a successful company. Returns of the ownership of the company. Your business has to make enough money to sustain itself. Aspects of your company that is most likely to affect the financial performance of the company. Updation of the financial performance of your business. Methods to manage a company's financial performance. Possibility of short-term income for the company. The advantage of investment in business.

The CIMA F3 Exam is computer-based and consists of 90 multiple-choice questions. Candidates have three hours to complete the exam, and a passing score is 70%. F3 exam is administered at authorized testing centers around the world, and candidates can register online through the CIMA website.

CIMA F3 Financial Strategy Sample Questions (Q109-Q114):

NEW QUESTION # 109
Company E is a listed company. Its directors are valuing a smaller listed company, Company F, as a possible acquisition.
The two companies operate in the same markets and have the same business risk.
Relevant data on the two companies is as follows:
Both companies are wholly equity financed and both pay corporate tax at 30%.
The directors of Company E believe they can "bootstrap" Company F's earnings to improve performance.
Calculate the maximum price that Company E should offer to Company F's shareholders to acquire the company.
Give your answer to the nearest $million.

Answer: C


NEW QUESTION # 110
A company's directors plan to increase gearing to come in line with the industry average of 40%. They need to know what the effect will be on the company's WACC.
According to traditional theory of gearing the WACC is most likely to:

Answer:

Explanation:

Explanation:
Increase initially then decrease
This question tests understanding of the traditional theory of capital structure, a core topic within CIMA F3 under Cost of Capital and Capital Structure. The traditional view differs from Modigliani and Miller by arguing that there is an optimal capital structure where a company's Weighted Average Cost of Capital (WACC) is minimised.
According to traditional theory, at low levels of gearing, introducing debt into the capital structure reduces WACC. This occurs because debt is generally cheaper than equity, largely due to lower risk for lenders and the tax deductibility of interest payments. Initially, equity holders do not perceive a significant increase in financial risk, so the cost of equity remains relatively stable. As a result, replacing some equity with cheaper debt lowers the overall WACC.
However, as gearing continues to rise beyond a certain point, the financial risk borne by both debt holders and equity holders increases substantially. Lenders demand higher interest rates to compensate for increased default risk, and shareholders require a higher return due to greater earnings volatility. This leads to rising costs of both debt and equity. Beyond the optimal gearing level, these rising costs outweigh the benefits of cheaper debt, causing WACC to increase.
CIMA F3 study guidance therefore concludes that under traditional theory, WACC:
* Falls initially as gearing increases, and
* Rises after the optimal capital structure is exceeded.
Since the directors are increasing gearing toward an industry average, the most appropriate description of WACC behaviour under traditional theory is that it will decrease initially and then increase.


NEW QUESTION # 111
Company M is a geared company whose equity has a market value of $1,500 million and debt has a market value of S300 million. The company plans to issue $200 million of new shares and use the funds raised to pay off some of the debt Company M currently has a cost of equity of 13% and a WACC of 10% It pays corporate tax at the rate of
30% Company B, an ungeared company operating in the same business sector as Company M, has a cost of equity of 12% Assume Modigliani and Miller's theory of capital structure with tax applies Which calculation below shows the correct approach to calculating the new WACC following the planned changes in capital structure?

Answer: A

Explanation:
To get the new WACC using Modigliani & Miller with tax:Find the ungeared (asset) cost of capital, KuK_uKu.Company B is ungeared and in the same business, so its cost of equity = asset return:Ku=12%K_u
= 12%Ku=12% Work out the new capital structure after the refinancing.Current equity = $1,500mCurrent debt = $300mNew equity issue = $200m (used to repay debt)New equity E1=1,500+200=1,700E_1 = 1,500 +
200 = 1,700E1=1,500+200=1,700New debt D1=300#200=100D_1 = 300 - 200 = 100D1=300#200=100Total value (using market values) V1=D1+E1=100+1,700=1,800V_1 = D_1 + E_1 = 100 + 1,700 = 1,800 V1=D1+E1=100+1,700=1,800.Apply MM with tax for WACC:WACC=Ku[1#TDV] ext{WACC} = K_u
left[1 - T rac{D}{V} ight]WACC=Ku[1#TVD] WACC1=12%[1#0.30×1001,800] ext{WACC}_1 = 12%
left[1 - 0.30 imes rac{100}{1,800} ight]WACC1=12%[1#0.30×1,800100] This gives approximately:12%
×(1#0.0167)#12%×0.9833#11.8%12% imes (1 - 0.0167) approx 12% imes 0.9833 approx 11.8%12%× (1#0.0167)#12%×0.9833#11.8% This matches option B: 11.8%=12%×[1#(0.30×100/1,800)]11.8% = 12%
imes [1 - (0.30 imes 100 / 1,800)]11.8%=12%×[1#(0.30×100/1,800)].


NEW QUESTION # 112
Company WWW is identical in all operating and risk characteristics to Company ZZZ. but their capital structures differ. Company WWW and Company ZZZ both pay corporate income tax at 20% Company WWW has a gearing ratio (debt: equity) of 1:3 Its pre-tax cost of debt is 6%.
Company ZZZ Is all-equity financed. Its cost of equity is 15%
What is the cost of equity tor Company WWW?

Answer: D

Explanation:
For WWW (geared 1:3 debt:equity):
D/E=1/3D/E = 1/3D/E=1/3
Let E=3xE = 3xE=3x, D=xD = xD=x # V=4xV = 4xV=4x
E/V=3/4=0.75E/V = 3/4 = 0.75E/V=3/4=0.75, D/V=1/4=0.25D/V = 1/4 = 0.25D/V=1/4=0.25 Cost of debt Kd=6%K_d = 6%Kd=6% Unlevered cost relation:
Ku=EVKe+DVKdK_u = rac{E}{V}K_e + rac{D}{V}K_dKu=VEKe+VDKd 0.15=0.75Ke+0.25×0.
060.15 = 0.75K_e + 0.25 imes 0.060.15=0.75Ke+0.25×0.06 0.15=0.75Ke+0.0150.15 = 0.75K_e + 0.0150.15
=0.75Ke+0.015 0.75Ke=0.135#Ke=0.1350.75=0.18=18%0.75K_e = 0.135 Rightarrow K_e = rac{0.135}
{0.75} = 0.18 = 18%0.75Ke=0.135#Ke=0.750.135=0.18=18%


NEW QUESTION # 113
A company intends to sell one of its business units. Company W, by a management buyout (MBO). A selling price of S200 million has been agreed.
The managers are discussing with a bank and a venture capital company (VCC) the following financing proposal.

The VCC requires a minimum return on its equity investment In the MBO of 35% a year on a compound basis over 5 years. What is the minimum total equity value of Company W in 5 years time in order to meet the VCC's required return? Give your answer to one decimal place.

Answer: A


NEW QUESTION # 114
......

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