Company HJK is planning to bid for listed company BNMFinancial data for BNM for the...

CIMA F3 Question Answer

Company HJK is planning to bid for listed company BNM

Financial data for BNM for the financial year ended 31 December 20X1:

HJK is not forecasting any growth in these figures for the foreseeable future

Profit and cost data above should be assumed to be equivalent to cash flow data when answenng this question

Which THREE of the following approaches would be most appropriate for HJK to use to value the equity of BNM?

Cash flows of S24 million discounted at the cost of equity

Share price x number of shares in issue plus retained profits

Cash flows of S14 million discounted at the cost of equity

Share price x number of shares in issue

Cash flows of $30 million (= S40 million net of tax at 25%) discounted at WACC minus the value of debt

CIMA F3 Summary

Price: $52.5 ~~$149.99~~