F3 Exam Dumps | A company's dividend policy is to pay out 50% of its earnings. Its most recent earnings per share was

<< Prev Question Next Question >>

Question 2/185

A company's dividend policy is to pay out 50% of its earnings.
Its most recent earnings per share was $0.50, and it has just paid a dividend per share of $0.25.
Currently, dividends are forecast to grow at 2% each year in perpetuity and the cost of equity is 10.5%.
In order to grow its earnings and dividends, the company is considering undertaking a new investment funded entirely by debt finance. If the investment is undertaken:
* Its cost of equity will immediately increase to 12% due to the increased finance risk.
* Its earnings and dividends will immediately commence growing at 4% each year in perpetuity.
Which of the following is the expected percentage change in the share price if the new investment is undertaken?

A. Decrease = 7.7%

B. Increase = 2%

C. Increase = 10.5%

D. Increase = 8.3%

Question List (185q): Question 1: A company generates operating profit of $17.2 million, and i...; Question 2: A company's dividend policy is to pay out 50% of its earning...; Question 3: Which of the following statements about IFRS 7 Financial Ins...; Question 4: Company R is a well-established, unlisted, road freight comp...; Question 5: An unlisted company: * Is owned by the original founder and ...; Question 6: A large, listed company is planning a major project that sho...; Question 7: A profit-seeking company intends to acquire another company ...; Question 8: A company's annual dividend has grown steadily at an annual ...; Question 9: H Company has a fixed rate load at 10.0%, but wishes to swap...; Question 10: Company B is an all equity financed company with a cost of e...; Question 11: The Government of Eastland is concerned that competition wit...; Question 12: A company is funded by: * $40 million of debt (market value)...; Question 13: A company is valuing its equity prior to an initial public o...; Question 14: A company has a financial objective of maintaining a gearing...; Question 15: A company plans to raise finance for a new project. It is co...; Question 16: Company BBB has prepared a valuation of a competitor company...; Question 17: The directors of the following four entities have been discu...; Question 18: A company in country T is considering either exporting its p...; Question 19: An entity prepares financial statements to 30 June. During t...; Question 20: Hospital X provides free healthcare to all members of the co...; Question 21: Companies L. M N and O: * are based in a country that uses t...; Question 22: A company plans to cut its dividend but is concerned that th...; Question 23: Company M's current profit before interest and taxation is $...; Question 24: Company A needs to raise AS500 mi lion to invest in a new pr...; Question 25: Company Z has identified four potential acquisition targets:...; Question 26: The Board of Directors of a listed company have decided that...; Question 27: A company is financed by debt and equity and pays corporate ...; Question 28: A company based in Country A with the A$ as its functional c...; Question 29: Company E is a listed company. Its directors are valuing a s...; Question 30: Integrated reporting is designed to make visible the capital...; Question 31: Two unlisted companies TTT and YYY are being valued. The com...; Question 32: Two companies that operate in the same industry have differe...; Question 33: A listed company is financed by debt and equity. If it incre...; Question 34: A company has some 7% coupon bonds in issue and wishes to ch...; Question 35: CI IJ has decided to move its production plant to overseas c...; Question 36: A company's current earnings before interest and taxation ar...; Question 37: The Board of Directors of a listed company wish to estimate ...; Question 38: A company is considering whether to lease or buy an asset. T...; Question 39: A company plans a four-year project which will be financed b...; Question 40: Extracts from a company's profit forecast for the next finan...; Question 41: X exports goods to customers in a number of small countries ...; Question 42: A company has: * A price/earnings (P/E) ratio of 10. * Earni...; Question 43: A project requires an initial outlay of $2 million which can...; Question 44: A company with a market capitalisation of S50million is cons...; Question 45: A listed company follows a policy of paying a constant divid...; Question 46: A company currently has a 5.25% fixed rate loan but it wishe...; Question 47: A manufacturing company based in Country R. where the curren...; Question 48: Company AAB is located in country A whose currency is the AS...; Question 49: The directors of a multinational group have decided to sell ...; Question 50: Company R is a major food retailer. It wishes to acquire Com...; Question 51: Company B is an all equity financed company with a cost of e...; Question 52: A listed company follows a policy of paying a constant divid...; Question 53: On 31 October 20X3: * A company expected to agree a foreign ...; Question 54: Providers of debt finance often insist on covenants being en...; Question 55: A company is owned by its five directors who want to sell th...; Question 56: A listed entertainment and media company produces and distri...; Question 57: Which THREE of the following would be most important if a ho...; Question 58: A company wishes to raise new finance using a rights issue. ...; Question 59: Assume today is 31 December 20X1. A listed mobile phone comp...; Question 60: A product costs USD10 when purchased in the USA. The same pr...; Question 61: Company A is subject to a takeover bid from Company B, both ...; Question 62: A large multi-divisional company in the food processing and ...; Question 63: A large, quoted company that is all-equity financed is plann...; Question 64: A company needs to raise $20 million to finance a project. I...; Question 65: A company has convertible bonds in issue. The following debt...; Question 66: A company intends to sell one of its business units, Company...; Question 67: Company A is proposing a rights issue to finance a new inves...; Question 68: An unlisted company which is owned and managed by its origin...; Question 69: A company's latest accounts show profit after tax of $20.0 m...; Question 70: Company A is located in Country A, where the currency is the...; Question 71: A company is planning to repurchase some of its shares. Rele...; Question 72: A listed entertainment and media company produces and distri...; Question 73: XYZ is a multi-national group with subsidiary AA in Country ...; Question 74: An unlisted company operates in a niche market, exploring th...; Question 75: A company needs to raise $40 million to finance a project. I...; Question 76: The directors of a financial services company need to calcul...; Question 77: A company is considering the issue of a convertible bond com...; Question 78: Which THREE of the following methods of business valuation w...; Question 79: Company C has received an unwelcome takeover bid from Compan...; Question 80: Company A has just announced a takeover bid for Company B. T...; Question 81: AA is considering changing its capital structure. The follow...; Question 82: Two companies that operate in the same industry have differe...; Question 83: Z wishes to borrow at a floating rate and has been told that...; Question 84: Select the category of risk for each of the descriptions bel...; Question 85: Z wishes to borrow at a floating rate and has been told that...; Question 86: The Board of Directors of a small listed company engaged in ...; Question 87: X exports goods to customers in a number of small countries ...; Question 88: Company T is a listed company in the retail sector. Its curr...; Question 89: A company has a covenant on its 5% long-term bond, stipulati...; Question 90: Which of the following best explains why the interest rate p...; Question 91: Using the CAPM, the expected return for a company is 10%. Th...; Question 92: Company T is a listed company in the retail sector. Its curr...; Question 93: A large, listed company in the food and household goods indu...; Question 94: Using the CAPM, the expected return for a company is 10%. Th...; Question 95: Which of the following would be a reason for a company to ad...; Question 96: On 31 October 20X3: * A company expected to agree a foreign ...; Question 97: A company's main objective is to achieve an average growth i...; Question 98: A company aims to increase profit before interest and tax (P...; Question 99: A company wishes to raise new finance using a rights issue. ...; Question 100: DFG is a successful company and its shares are listed on a r...; Question 101: A company plans a four-year project which will be financed b...; Question 102: Which THREE of the following are benefits of integrated repo...; Question 103: Company X is based in Country A, whose currency is the A$. I...; Question 104: Company A, a listed company, plans to acquire Company T, whi...; Question 105: Company X plans to acquire Company Y. Pre-acquisition inform...; Question 106: An entity prepares financial statements to 30 June. During t...; Question 107: A company has undertaken a transaction with its shareholders...; Question 108: Which THREE of the following are likely to be strategic reas...; Question 109: Which TWO of the following statements about debt instruments...; Question 110: An all-equity financed company currently generates total rev...; Question 111: Company S is planning to acquire Company T. The shareholders...; Question 112: A company intends to sell one of its business units. Company...; Question 113: It is now 1 January 20X0. Company V, a private equity compan...; Question 114: A company has: * $6 million market value of equity * $4 mill...; Question 115: Company A, a listed company, plans to acquire Company T, whi...; Question 116: Company A is planning to acquire Company B at a price of $ 6...; Question 117: A company aims to increase profit before interest and tax (P...; Question 118: A company has announced a rights issue of 1 new share for ev...; Question 119: Company C invests heavily in Research and Development an nee...; Question 120: The value of a call option will increase because of:...; Question 121: A listed company in a high growth industry, where innovation...; Question 122: If a company's bonds are currently yielding 8% in the market...; Question 123: Company P is a pharmaceutical company listed on an alternati...; Question 124: A company in country T is considering either exporting its p...; Question 125: A company plans to acquire new machinery. It has two financi...; Question 126: A national airline has made an offer to acquire a smaller ai...; Question 127: A listed company plans to raise $350 million to finance a ma...; Question 128: Company M plans to bid for Company J. Company M has 20 milli...; Question 129: Company J plans to acquire Company K, an unlisted company wh...; Question 130: RR has agreed to sell goods to XX for S20.000 XX will pay wh...; Question 131: A company has: * 10 million $1 ordinary shares in issue * A ...; Question 132: A company is considering taking out $10.000,000 of floating ...; Question 133: A company generates and distributes electricity and gas to h...; Question 134: Using the CAPM, the expected return for a company is 11%. Th...; Question 135: At the last financial year end, 31 December 20X1, a company ...; Question 136: Company A is unlisted and all-equity financed. It is trying ...; Question 137: A company intends to sell one of its business units, Company...; Question 138: A listed company is planning a share repurchase. Research in...; Question 139: A Venture Capital Fund currently holds a significant shareho...; Question 140: A company needs to raise $20 million to finance a project. I...; Question 141: A new company was set up two years ago using the personal fi...; Question 142: Company A has just announced a takeover bid for Company B. T...; Question 143: A company is wholly equity funded. It has the following rele...; Question 144: Which three of the following are most likely be primary obje...; Question 145: The Board of Directors of Company T is considering a rights ...; Question 146: The financial assistant of a geared company has prepared the...; Question 147: Two unlisted companies TTT and YYY are being valued. The com...; Question 148: A company plans to cut its dividend but is concerned that th...; Question 149: Which THREE of the following statements are correct?...; Question 150: A manufacturing company is based in Country L whose currency...; Question 151: Company AEE has a 10 year 6% corporate bond in issue which h...; Question 152: The competition authorities are investigating the takeover o...; Question 153: Company A, a listed company, plans to acquire Company T, whi...; Question 154: Company W has received an unwelcome takeover bid from Compan...; Question 155: A company is preparing an integrated report according to the...; Question 156: An all equity financed company plans an issue of new ordinar...; Question 157: The directors of the following four entities have been discu...; Question 158: A company is in the process of issuing a 10 year $100 millio...; Question 159: A listed company is planning to raise $21.6 million to finan...; Question 160: An all equity financed company reported earnings for the yea...; Question 161: A company's directors plan to increase gearing to come in li...; Question 162: A company's latest accounts show profit after tax of $20.0 m...; Question 163: A company wishes to raise additional debt finance and is ass...; Question 164: Company S is planning to acquire Company T. The shareholders...; Question 165: Company C is a listed company. It is currently considering t...; Question 166: A company has: * $7 million market value of equity * $5 mill...; Question 167: Which THREE of the following statements are correct in respe...; Question 168: Modigliani and Miller are the main proponents of the view th...; Question 169: Companies L. M N and O: * are based in a country that uses t...; Question 170: A listed company is planning a share repurchase. Research in...; Question 171: B has a S3 million loan outstanding on which the interested ...; Question 172: PYP is a listed courier company. It is looking to raise new ...; Question 173: A company generates and distributes electricity and gas to h...; Question 174: Company A has a cash surplus. The discount rate used for a t...; Question 175: Company AD is planning to acquire Company DC. It is evaluati...; Question 176: A UK company enters into a 5 year borrowing with bank P at a...; Question 177: A UK based company is considering investing GBP1 ,000,003 in...; Question 178: A national rail operating company has made an offer to acqui...; Question 179: XYZ has a variable rate loan of $200 million on which it is ...; Question 180: A company is planning to issue a 5 year $100 million bond at...; Question 181: Company A is planning to acquire Company B. Company A's mana...; Question 182: Company A is a large well-established listed entertainment c...; Question 183: CI IJ has decided to move its production plant to overseas c...; Question 184: A company has identified potential profitable investments th...; Question 185: A company's current earnings before interest and taxation ar...

Question 2/185

LEAVE A REPLY

Download PDF File