An unlisted company:
* Is owned by the original founder and member of their families.
* Is growing more rapidly than other companies in the same industry.
* Pays a fixed annual divided
Which of the following methods would be the most appropriate to value this company's equity?

• A.P/E ratio of a listed company in the same industry.
• B.Divided valuation method.
• C.Discounted cash flow analysis based on forecast future free cash flows.
• D.Asset based approach including intangibles.

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Company A operates in country A with the AS as its functional currency. Company A expects to receive BS500.000 in 6 months' time from a customer in Country B which uses the B$.
Company A intends to hedge the currency risk using a money market hedge
The following information is relevant:

What is the AS value of the BS expected receipt in 6 months' time under a money market hedge?

• A.AS31, 482
• B.AS32, 051
• C.AS32, 532
• D.AS31, 790

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An unlisted company.
* Is owned by the original founders and members of their families
* Pays annual dividends each year depending on the cash requirements of the dominant shareholders.
* Has earnings that are highly sensitive to underlying economic conditions.
* Is a small business in a large Industry where there are listed companies with comparable capital structures Which of the following methods is likely to give the most accurate equity value for this unlisted company?

• A.Dividend valuation model.
• B.Discounted cash flow analysis at WACC (based on cash flows after tax but before financing) plus the market value of debt.
• C.P/E based valuation using the P/E of a similar company.
• D.Net asset valuation

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A private company was formed five years ago and is currently owned and managed by its five founders. The founders, who each own the same number of shares have generally co-operated effectively but there have also been a number of areas where they have disagreed
The company has grown significantly over this period by re-investing its earnings into new investments which have produced excellent returns
The founders are now considering an Initial Public Offering by listing 70% of the shares on the local stock exchange
Which THREE of the following statements about the advantages of a listing are valid?

• A.Helps access to wider sources of finance.
• B.Provides an exit route for the founders
• C.Increases the profile and reputation of the business.
• D.Increases dividend payouts
• E.Reduces agency conflict

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A listed company is planning a share repurchase.
The following data applies:
* There are 10 million shares in issue
* The share repurchase will involve buying back 20% of the shares at a price of $0.75
* The company is holding $2 million cash
* Earnings for the current year ended are $2 million
The Directors are concerned about the impact that this repurchase programme will have on the company's cash balance and current year earnings per share (EPS) ratio.
Advise the directors which of the following statements is correct?

• A.The cash balance will decrease by 75% and EPS will decrease by 25%.
• B.The cash balance will decrease by 20% and the EPS will decrease by 25%.
• C.The cash balance will decrease by 20% and the EPS will increase by 25%.
• D.The cash balance will decrease by 75% and EPS will increase by 25%.

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