CIMAPRA19-F03-1-ENG Practice Online

Question 1

A listed company in a high technology industry has decided to value its intellectual capital using the

Calculated Intangible Value method (CIV).

Relevant data for the company:

• Pays corporate income tax at 30%

• Cost of equity is 9%, pre-tax cost of debt is 7% and the WACC is 8%

• The value spread has been calculated as $26 million

Calculate the CIV for the company.

A : 228 million

B : 289 million

C : 531 million

D : 325 million

Answer: A

Question 2

TU has relatively few tangible assets and is dependent for profits and growth on the high-value individuals it employs. Which of the following statements best explains why the net asset valuator method’s considered unstable for TU?

A : TU does not account for its tangible assets

B : TU does not account for its intangible assets.

C : TU accounts for its intangible assets at net realisable value.

D : TU accounts for its intangible assets at historical value.

Answer: B

Question 3

A company has just received a hostile bid. Which of the following response strategies could be considered?

A : Revalue non-current assets

B : Poison pill strategy

C : Change the Articles of Association to amend voting rights

D : Approach a White Knight

Answer: D

Question 4

A company’s statement of financial position includes non-current assets which are leased, the tax regime

follows the accounting treatment.

Which cash flows should be discounted when evaluating the cost of lease finance?

A : Lease payments, implied interested and straight-line accounting deprediation.

B : Lease payments and straight-line accounting depreciation.

C : Lease payments and implied interest.

D : Lease payments, tax relief on implied interest and tax relief on straight-line account depreciation.

Answer: B

Question 5

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 : creates value in the short, medium and long term.

C : contributes positively to the economic well being of the environment in which it operates.

D : ensures that the conflicting needs of different stakeholder groups are met in an optimal manner.

Answer: B

Name:	F3 Financial Strategy (Online)
Exam Code:	CIMAPRA19-F03-1-ENG
Certification:	CIMA Professional Qualification
Vendor:	CIMA
Total Questions:	305
Last Updated:	May 13, 2024

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