A company is planning a new share issue.

CIMA F3 Question Answer

The funds raised will be used to repay debt on which it is currently paying a high interest rate.

Operating profit and dividends are expected to remain unchanged in the near future.

If the share issue is implemented, which THREE of the following are most likely to increase?

The cost of equity

The number of shares in issue

Next year's payment of corporate income tax

The gearing (book value of debt as a percentage of the book value of equity + debt)

Interest cover

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