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CIMA Strategic F3 Question # 65 Topic 8 Discussion

F3 Exam Topic 8 Question 65 Discussion:
Question #: 65
Topic #: 8

Company AEE has a 10 year 6% corporate bond in issue which has a nominal value of $400 million, which is currently trading at 95%. The bond is secured on the company's property

The Board of Directors has calculated the equity value of Company AEE as follows;

F3 Question 65

Which THREE of the following are errors in the valuation?
A.

Including retained earnings from the Statement of Financial Position.

B.

Deducting $400 million for the value of the company's corporate bond.

C.

Using the company's weighted average cost of capital to discount cash flows attributable to shareholders.

D.

Using cash flows to equity rather than expected dividends as the initial cash flows.

E.

Deducting replacement capital expenditure

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Actual exam question for CIMA F3 exam by Rael627 at May 5, 2026, 4:32:50 AM

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