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CIMA Exam CIMAPRA19-F03-1 Topic 7 Question 24 Discussion
Actual exam question for
CIMA's
CIMAPRA19-F03-1 exam
Question #: 24
Topic #: 7
[All CIMAPRA19-F03-1 Questions]
Topic #: 7
An all equity financed company reported earnings for the year ending 31 December 20X1 of $5 million.
One of its financial objectives is to increase earnings by 5% eachyear.
In the year ending 31 December 20X2 itfinanced a project byissuing a bondwith a $1 million nominal value and a coupon rate of 7%.
Thecompany payscorporate income taxat30%.
If the company is to achieve its earnings target for the year ending 31 December 20X2, what is the minimum operating profit (profit before interest and tax) that it must achieve?
Suggested Answer:
C
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