A company wishes to raise new finance using a rights issue to invest in a new project offering an IRR of 10% The following data applies:
* There are currently 1 million shares in issue at a current market value of $4 each.
* The terms of the rights issue will be $3.50 for 1 new share for 5 existing shares.
* The company's WACC is currently 8%.
What is the yield-adjusted theoretical ex-rights price (TERP)?
Give your answer to 2 decimal places.
$ ?

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Which three of the following are most likely be primary objectives for a newly established, unincorporated entity in the service sector?

• A.Providing consistently high levels service quality
• B.Maintaining sufficient liquidity in the business to avoid overtrading
• C.Reaching an optimum capital structure
• D.Increasing Revenue
• E.Increasing the dividend payment year on year

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A listed company is planning to raise $21.6 million to finance a new project with a positive net present value of $5 million. The finance is to be raised via a rights issue at a 10% discount to the current share price. There are currently 100 million shares in issue, trading at $2.00 each.
Taking the new project into account, what would the theoretical ex-rights price be?
Give your answer to two decimal places.

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Which THREE of the following statements are true of a money market hedge?

• A.They leave the company exposed to currency risks.
• B.They are easy to set up.
• C.They offer roughly the same outcome as a forward contract.
• D.They are more complex than forward contracts.
• E.They may be a little more flexible in comparison to a forward contract.

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

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