Weekend Sale Limited Time 65% Discount Offer - Ends in 0d 00h 00m 00s - Coupon code: ac4s65

A company has identified potential profitable investments that would require a total of S50 million...

CIMA F3 Full Course Access
CIMA F3 View All Questions

A company has identified potential profitable investments that would require a total of S50 million capital expenditure over the next two years The following information is relevant.

• The company has 100 million shares in issue and has a market capitalisation of S500 million

• It has a target debt to equity ratio of 40% based on market values This ratio is currently 30%

• Earnings for the current year are expected to be S1 00 million

• Its last dividend payment was $1 per share One of the company's objectives is to increase dividends by at least 10% each year

• The company has no cash reserves

Which of the following is the most suitable method of financing to meet the company's requirements?

A.

Use a share repurchase scheme rather than pay a cash dividend

B.

Increase debt to meet the target debt to equity ratio.

C.

Reduce dividends for this year only to 50 cents a share.

D.

Maintain dividends at $1 per share for the next two years.

F3 PDF/Engine
  • Printable Format
  • Value of Money
  • 100% Pass Assurance
  • Verified Answers
  • Researched by Industry Experts
  • Based on Real Exams Scenarios
  • 100% Real Questions
buy now F3 pdf
Get 65% Discount on All Products, Use Coupon: "ac4s65"
Next
X exports goods to customers in a number of small countries Asia.
Company W is a manufacturing company with three divisions, all of which are making profits:•...
Previous