CIMA Exam CIMAPRA19-F03-1 Topic 7 Question 22 Discussion

Actual exam question for CIMA's CIMAPRA19-F03-1 exam

Question #: 22
Topic #: 7

A profitable company wishes to dispose ofa loss-makingdivision thatgenerated negative free cashflow in the last financial year.

The division requires significant new investment to return it to profitability.

Which of the following valuation approaches is likely to be the most useful to the company when negotiating the sales price?

ADividend growth model

BAsset basis

CDiscounted forecast free cashflow

DP/E ratio applied to forecast earnings next year

Show Suggested Answer

Suggested Answer: C

by Timothy at May 03, 2022, 11:45 PM

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