Company J is in negotiations to acquire Company K and believes it can turn around Company K's performance to match its own.
The following information is available for the two companies:

Select the maximum price for each share that Company J should place on Company K during negotiations.

• A.$1.7
• B.$3.2
• C.$2.0
• D.$3.0

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A company plans to raise $12 million to finance an expansion project using a rights issue.
Relevant data:
* Shares will be offered at a 20% discount to the present market price of $15.00 per share.
* There are currently 2 million shares in issue.
* The project is forecast to yield a positive NPV of $6 million.
What is the yield-adjusted Theoretical Ex-Rights Price following the announcement of the rights issue?

• A.$11.00
• B.$16.00
• C.$14.00
• D.$9.00

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Company R is a well-established, unlisted, road freight company.
In recent years R has come under pressure to improve its customer service and has had some cusses in doing this However, the cost of improved service levels has resulted In it marketing small losses in its latest financial year. This is the forest time R has not been profitable.
R uses a' residual divided policy ad has paid dividends twice in the last 10 years.
Which of the following methods would be most appropriate for valuating R?

• A.The earnings yield method, adjusting the earnings yield of a listed company downloads to reflect R's unlisted status.
• B.The divided valuation mode.
• C.Valuing the tangible assets and intangible assets of R.D. The P/E method, adjusting the P/E of a listed company downwards to reflect R's unlisted status.

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A company is considering either exporting its product directly to customers in a foreign country or establishing a manufacturing subsidiary in that country.
The corporate tax rate in the company's own country is 20% and 25% tax depreciation allowances are available.
Which THREE of the following would be considered advantages of establishing the subsidiary in the foreign country?

• A.There are restrictions on companies wishing to remit profit from the foreign country.
• B.Year 1 tax depreciation allowances of 100% are available in the foreign country.
• C.There are high customs duties payable on products entering the foreign country.
• D.The corporate tax rate in the foreign country is 40%.
• E.There is a double tax treaty between the company's domestic country and the foreign country.

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Company AD is planning to acquire Company DC. It is evaluating two methods of structuring the terms of the bid, which will be ether a debt-funded cash offer or a share exchange
The following Information is relevant
* The two companies are of similar size and in related industries
* AB's gearing ratio measured as debt to debt plus equity, is currently 30% based on market values. This Is the company's optimum capital structure set to reflect the risk appetite of shareholders.
* The combined company is expected to generate savings and synergies
Which THREE of the following are advantages to AB's shareholders of a debt-funded cash offer compared with a share exchange?

• A.Gearing will increase.
• B.WACC will increase f credit worthless falls too low, further increasing the returns to shareholders.
• C.EPS Mil Increase
• D.More of the synergistic benefits of the acquisition will accrue to AB's current shareholders.
• E.Shareholder control will remain with AB's current shareholders

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