6月ACCA F9考试真题及答案

Financial Management
Thursday 4 June 2009

ALL FOUR questions are compulsory and MUST be attempted
1 KFP Co, a company listed on a major stock market, is looking at its cost of capital as it prepares to make a bid to buy
a rival unlisted company, NGN. Both companies are in the same business sector. Financial information on KFP Co
and NGN is as follows:
KFP Co NGN
$m $m $m $m
Non-current assets 36 25
Current assets 7 7
Current liabilities 3 4
— —
Net current assets 4 3
— —
Total assets less current liabilities 40 28
— —
Ordinary shares, par value 50c 15 5
Retained earnings 10 3
— —
Total equity 25 8
7% bonds, redeemable at par in seven years’ time 15
9% bonds, redeemable at par in two years’ time 20
— —
Total equity and non-current liabilities 40 28
— —
Other relevant financial information:
Risk-free rate of return 4·0%
Average return on the market 10·5%
Taxation rate 30%
NGN has a cost of equity of 12% per year and has maintained a dividend payout ratio of 45% for several years. The
current earnings per share of the company is 80c per share and its earnings have grown at an average rate of 4·5%
per year in recent years.
The ex div share price of KFP Co is $4·20 per share and it has an equity beta of 1·2. The 7% bonds of the company
are trading on an ex interest basis at $94·74 per $100 bond. The price/earnings ratio of KFP Co is eight times.
The directors of KFP Co believe a cash offer for the shares of NGN would have the best chance of success. It has
been suggested that a cash offer could be financed by debt.