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

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

Question #: 38
Topic #: 1

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%?

AThe project is in a different industry to XY's current operations and funded entirely by equity.

BThe project is an extension of XY's current operations and is funded 40% by debt and 60% by equity.

CThe project is an extension of XY's current operations and is funded by equal amounts of debt and equity.

DThe project is in a different industry to XY's current operations and is funded by equal amounts of debt and equity.

Show Suggested Answer

Suggested Answer: B

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

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Aimee

4 months ago

Totally agree with B, makes the most sense!

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Laurel

4 months ago

C is also a valid choice, funding mix is key!

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Raul

4 months ago

Wait, can you really use the same WACC for a different industry?

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Jamey

4 months ago

Definitely B! It aligns with current operations and funding.

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Ruthann

5 months ago

WACC of 10% is based on a 40% gearing level.

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Selma

5 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

5 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

5 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

5 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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