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CIMAPRA19-F02-1 Exam - Topic 1 Question 38 Discussion

XYhas a weighted average cost of capital (WACC) of 10% based on its gearing level (measured as debt/debt+equity) of 40%. It is considering a signficant new project.In which of the following situations would it be appropriate to appraise this project using XY's existing WACC of 10%?
B) The project is an extension of XY's current operations and is funded 40% by debt and 60% by equity.
A) The project is in a different industry to XY's current operations and funded entirely by equity.
C) The project is an extension of XY's current operations and is funded by equal amounts of debt and equity.
D) The project is in a different industry to XY's current operations and is funded by equal amounts of debt and equity.

CIMAPRA19-F02-1 Exam - Topic 1 Question 38 Discussion

Actual exam question for CIMA's CIMAPRA19-F02-1 exam
Question #: 38
Topic #: 1
[All CIMAPRA19-F02-1 Questions]

XYhas a weighted average cost of capital (WACC) of 10% based on its gearing level (measured as debt/debt+equity) of 40%. It is considering a signficant new project.

In which of the following situations would it be appropriate to appraise this project using XY's existing WACC of 10%?

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Suggested Answer: B

by Rasheeda at May 08, 2022, 03:06 AM

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Aimee
11 months ago
Totally agree with B, makes the most sense!
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Laurel
11 months ago
C is also a valid choice, funding mix is key!
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Raul
11 months ago
Wait, can you really use the same WACC for a different industry?
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Jamey
11 months ago
Definitely B! It aligns with current operations and funding.
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Ruthann
11 months ago
WACC of 10% is based on a 40% gearing level.
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Selma
11 months ago
I'm a bit confused by the wording of the question. Does it mean every time a user tries to access the registry, or just when they're denied access? I'll need to double-check my understanding.
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Lewis
12 months ago
Okay, I think the key feature of tags in Adobe Analytics is that developers can build, manage, and update integrations using a self-service interface. That sounds like the most logical answer to me.
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Stephen
12 months ago
I'm pretty confident I know the encryption algorithms used by SSH. I'll carefully review the options and select all the correct ones.
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Daren
12 months ago
I'm kind of torn between B and D; they don't seem directly related to data protection, but maybe I'm missing a detail from my notes.
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