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CIMA Exam CIMAPRA19-F03-1 Topic 7 Question 90 Discussion

Actual exam question for CIMA's CIMAPRA19-F03-1 exam
Question #: 90
Topic #: 7
[All CIMAPRA19-F03-1 Questions]

NNN is a company financed by both equity and debt. The directors of NNN wish to calculate a valuation of the company's equity and at a recent board meeting discussed various methods of business valuation.

Which THREE of the following are appropriate methods for the directors of NNN to use in this instance?

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Suggested Answer: A, B, E

by Misty at Jul 05, 2024, 06:04 AM

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Hillary
4 months ago
D looks pretty solid too, as long as they properly account for the debt. Can't forget the cost of equity!
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Tamar
4 months ago
Haha, I bet the directors are really sweating this one. Better not forget about that pesky debt, am I right?
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Billye
4 months ago
D) Cash flow to equity discounted at the cost of equity less the value of debt.
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Lawrence
4 months ago
B) Cash flow to all investors discounted at WACC less the value of debt.
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Susana
4 months ago
A) Total earnings multiplied by a suitable price-earnings ratio.
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Eleonore
5 months ago
I like C and E - gotta focus on that cash flow to all investors, not just equity.
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Jannette
4 months ago
C) Cash flow to all investors discounted at WACC.
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Hannah
4 months ago
B) Cash flow to all investors discounted at WACC less the value of debt.
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German
4 months ago
A) Total earnings multiplied by a suitable price-earnings ratio.
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Torie
4 months ago
C) Cash flow to all investors discounted at WACC.
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Raul
4 months ago
B) Cash flow to all investors discounted at WACC less the value of debt.
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Gail
4 months ago
A) Total earnings multiplied by a suitable price-earnings ratio.
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Erick
5 months ago
B, C, and E seem like reasonable options here. I'd avoid A since it doesn't account for the debt financing.
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Vilma
4 months ago
Yes, A doesn't consider the debt, so it's not the best choice here.
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Lai
5 months ago
I agree, B, C, and E are the most appropriate methods for valuation in this case.
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Leonard
6 months ago
I believe option C is the most appropriate method for valuation.
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Nathan
6 months ago
I agree, but I also think option B could be useful.
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Van
6 months ago
I think option A is a good method to use for valuation.
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