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CIMA Exam CIMAPRA19-F03-1 Topic 6 Question 87 Discussion

Actual exam question for CIMA's CIMAPRA19-F03-1 exam
Question #: 87
Topic #: 6
[All CIMAPRA19-F03-1 Questions]

Company ABC is planning to bid forcompanyDDD, an unlisted company in an unrelated industry sector to ABC.

The directors of ABC are considering a number of different valuation methods for DDDbefore making a bid.

Which of the following is the MOST appropriate method for ABC to use to value DDD?

Show Suggested Answer Hide Answer
Suggested Answer: A, B, E

by Terrilyn at May 18, 2024, 10:01 PM

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Jesusa
10 months ago
I bet the board meeting was a real 'NNN'credible discussion. Sorry, couldn't resist the pun!
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Ellsworth
9 months ago
D) Cash flow to equity discounted at the cost of equity less the value of debt.
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Renea
9 months ago
B) Cash flow to all investors discounted at WACC less the value of debt.
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Blossom
9 months ago
A) Total earnings multiplied by a suitable price-earnings ratio.
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Nicolette
10 months ago
I wonder if the directors of NNN are as creative as their company name. Gotta keep things interesting, am I right?
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Florinda
10 months ago
This is a tough one, but I'd go with B, C, and E. Diversifying the approach is key, you know?
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Albina
9 months ago
Definitely, E is also crucial for calculating the valuation of the company's equity.
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Alesia
10 months ago
I agree, C is important too as it takes into account the weighted average cost of capital.
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Glenn
10 months ago
I think B is a good choice because it considers the value of debt.
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Steffanie
10 months ago
Hmm, I'm not sure about option D. Discounting the cash flow to equity at the cost of equity AND subtracting the debt value? Seems like overkill to me.
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Celestina
10 months ago
I agree with Ciara. B and C are the way to go. Gotta love that WACC discount!
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Sueann
9 months ago
I agree, WACC discount is key in this situation.
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Mirta
9 months ago
I think B and C are the best methods for valuation.
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Blossom
9 months ago
I agree, WACC discount is key in this situation.
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Temeka
9 months ago
I agree, C is also a good option to consider.
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Evangelina
9 months ago
I think B and C are the best methods for valuation.
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Glennis
9 months ago
I think B is the best method for valuation.
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Ciara
10 months ago
Option B and C seem like the most appropriate methods for valuing the company's equity. Discounting the cash flow to all investors at WACC is a solid approach.
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Lawrence
9 months ago
I agree. It's important to use multiple methods to get a comprehensive valuation of the company's equity.
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Hayley
9 months ago
That's a good point. It's always good to explore different valuation methods.
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Janessa
9 months ago
I think we should also consider option E. Discounting cash flow to equity at the cost of equity could provide valuable insights.
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Lennie
9 months ago
Yes, that's true. It's important to consider all options.
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Celestina
10 months ago
What about option C? Discounting cash flow at WACC is also a valid method.
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Rachael
10 months ago
I agree, discounting cash flow at WACC makes sense.
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Lavera
10 months ago
I agree, discounting the cash flow to all investors at WACC makes sense.
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Allene
10 months ago
I think option B is a good choice.
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Keshia
10 months ago
I think option B is the best method for valuing the company's equity.
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