Online Access Free F3 Practice Test

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.

• A.1 new share for every 20 existing shares
• B.1 new share for every 25 existing shares
• C.1 new share for every 4 existing shares
• D.1 new share for every 5 existing shares

The International Integrated Reporting Council (IIRC) was formed in August 2010 and brings together a cross-section of representatives from a wide variety of business sectors.
The primary purpose of the IIRC's framework is to help enable an organsation to communicate how it:

• A.minimises the environmental impact of its business processes.
• B.contributes positively to the economic well being of the environment in which it operates.
• C.ensures that the conflicting needs of different stakeholder groups are met in an optimal manner.
• D.creates value in the short, medium and long term.

Company X plans to acquire Company Y.
Pre-acquisition information:

Post-acquisition information:
Total combined earnings are expected to increase by 10%
Total combined P/E multiple will remain at 10 times
Which of the following share-for-share exchanges will result in an increase of 10% in Company X's share price post-acquisition?

• A.1 share in Company X for 2 shares in Company Y
• B.2 shares in Company X for 1 shares in Company Y
• C.3 shares in Company X for 5 shares in Company Y
• D.1 share in Company X for 2.75 shares in Company Y

XYZ is a multi-national group with subsidiary AA in Country A and subsidiary BB in Country B. The capital structures of AA and BB are set up to take advantage of the lower tax rate in Country A Thin capitalisation rules in Country B will limit the ability for either AA or BB to claim tax relief on:

• A.interest earned by BB.
• B.interest paid by AA
• C.interest paid by BB
• D.interest earned by AA

A new company was set up two years ago using the personal financial resources of the founders.
These funds were used to acquire suitable premises.
The company has entered into a long-term lease on the premises which are not yet fully fitted out.
The founders are considering requesting loan finance from the company's bank to fund the purchase of custom-made advanced technology equipment.
No other companies are using this type of equipment.
The company expects to continue to be profitable for the forseeable future.
It re-invests some of its surplus cash in on-going essential research and development.
Which THREE of the following features are likely to be considered negatives by the bank when assessing the company's credit-worthiness?

• A.Essential on-going research and development expenditure is required.
• B.The company will continue to remain profitable and to generate net cash.
• C.The founders invested their personal financial resources in the company.
• D.The company premises are on a long-term lease but are not yet fully fitted out.
• E.The equipment is advanced technology custom-made equipment.