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ICAN Strategic Financial Management 2026 past questions and answers

This 2026 ICAN Strategic Financial Management set has 20 practice questions. Try these 5 free sample questions, tap a question to reveal the answer and explanation. Then practise the whole 2026 set with instant marking.

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Sample ICAN Strategic Financial Management 2026 questions

1. Aster Foods is considering a machine costing ₦12,000,000. It will generate net cash inflows of ₦5,000,000 at each year-end for three years, with no residual value. At a 10% discount rate, the three-year annuity factor is 2.487. What is the project's NPV?
  1. ₦435,000 negative
  2. ₦435,000 positive
  3. ₦12,435,000
  4. ₦24,435,000

Answer: B. ₦435,000 positive

Present value of inflows is ₦5,000,000 × 2.487 = ₦12,435,000; subtracting the ₦12,000,000 investment gives a positive NPV of ₦435,000. Option A reverses the sign, while C is the inflows' present value before deducting the investment.

2. Kora Plc targets a market-value capital structure of 60% equity and 40% debt. Its cost of equity is 15%, and its pre-tax cost of debt is 10%; interest is tax-deductible and the tax rate is 30%. What is its WACC using the target structure?
  1. 10.0%
  2. 12.0%
  3. 13.0%
  4. 11.8%

Answer: D. 11.8%

After-tax debt cost is 10% × (1 − 0.30) = 7%. WACC is (0.60 × 15%) + (0.40 × 7%) = 11.8%; using the pre-tax debt cost would overstate WACC.

3. A manufacturer has irredeemable debt with a 9% annual interest cost. Interest is fully tax-deductible and the corporation tax rate is 30%. Ignoring issue costs, what is the after-tax cost of debt?
  1. 6.3%
  2. 9.0%
  3. 12.9%
  4. 2.7%

Answer: A. 6.3%

The after-tax cost is 9% × (1 − 0.30) = 6.3%. Option B ignores the tax shield; 2.7% is the tax saving, not the after-tax cost.

4. A retailer increases its borrowing while operating profit remains volatile. Which effect is most directly associated with the higher gearing, all else equal?
  1. Interest payments become a variable share of operating profit
  2. The company's operating risk necessarily disappears
  3. Equity returns become more sensitive to changes in operating profit
  4. The tax shield guarantees that equity value rises

Answer: C. Equity returns become more sensitive to changes in operating profit

Fixed interest charges magnify the effect of operating-profit movements on earnings available to shareholders, increasing financial risk. Tax deductibility may provide a tax shield, but it does not guarantee an increase in equity value.

5. A buyer values a target using comparable-company EV/EBITDA multiples. The target's sustainable EBITDA is ₦40 million, the selected multiple is 6, and target net debt is ₦30 million. What equity value does this imply?
  1. ₦240 million
  2. ₦210 million
  3. ₦270 million
  4. ₦6.7 million

Answer: B. ₦210 million

Implied enterprise value is 6 × ₦40 million = ₦240 million; equity value is enterprise value less net debt, or ₦210 million. Option A confuses enterprise value with equity value.

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