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Exam F3 All Questions
Exam F3 All Questions

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CIMA Strategic F3 Question # 116 Topic 12 Discussion

F3 Exam Topic 12 Question 116 Discussion:
Question #: 116
Topic #: 12

A company's gearing is well below its optimal level and therefore it is considering implementing a share re-purchase programme.

This programme will be funded from the proceeds of a planned new long-term bond issue.

Its financial projections show no change to next year's expected earnings.

As a result, the company plans to pay the same total dividend in future years.

 

If the share re-purchase is implemented, which THREE of the following measures are most likely to decrease?


A.

The Weighted Average Cost of Capital


B.

The cost of equity


C.

The interest cover


D.

Next year's dividend per share


E.

The gearing, based on book value (debt ÷ (debt + equity))


F.

The number of shares in issue


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