CIMA Exam CIMAPRA19-F02-1 Topic 1 Question 93 Discussion

Actual exam question for CIMA's CIMAPRA19-F02-1 exam

Question #: 93
Topic #: 1

Which of the following best describes the goal of WACC as a measure?

ATo work out the average return that is required by the company on its investments in order to satisfy all shareholders and debt holders.

BTo work out the average return that is required by the company on its investments in order to satisfy all shareholders.

CTo work out the average return that is required by the company on its investments in order to satisfy all debt holders.

DTo work out the minimum return that is required by the company on its investments in order to satisfy all shareholders and debt holders.

Show Suggested Answer

Suggested Answer: A

by Isadora at Jul 12, 2024, 02:41 PM

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Yuette

20 hours ago

I wonder if the exam question includes a bonus round where we have to calculate the WACC using the Modigliani-Miller theorem and a financial calculator. That would be a real treat!

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Cordie

4 days ago

D) is wrong because WACC is not about the minimum return, but the average return required to satisfy all parties.

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Norah

16 days ago

B) is too narrow, as WACC should consider the needs of both shareholders and debt holders, not just shareholders.

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Lauran

20 hours ago

A) To work out the average return that is required by the company on its investments in order to satisfy all shareholders and debt holders.

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Percy

23 days ago

I think D is the correct answer because it mentions satisfying both shareholders and debt holders, but also specifies a minimum return.

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Tess

28 days ago

I'm not sure, but I think C could also be a valid option since it focuses on debt holders.

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Lashaunda

1 months ago

A) seems to be the most comprehensive answer. It takes into account the interests of both shareholders and debt holders, which is the true goal of WACC.

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Stevie

9 days ago

User2

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Noah

1 months ago

I agree with Dick, A makes sense because it considers all stakeholders.

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Dick

1 months ago

I think the goal of WACC is to satisfy both shareholders and debt holders, so I choose A.

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