CIMAPRA19-F02-1 Exam - Topic 1 Question 57 Discussion

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

Question #: 57
Topic #: 1

GH is seeking to finance a substantial new project that is guaranteed to enhance the profitability of the entity.Its keydeterminants in deciding upon the best source of finance are to balance the following requirements:

1) to minimise the costs of issue of the finance;

2) to avoid the need to find cash to repay the source of finance; and

3) to ensure that the long-term gearing level does not increase.

Whichof the following financing options best meets these requirements?

AConvertible loan stocks

BInitial public offering of ordinary shares

CRedeemable preference shares

DA term loan

Show Suggested Answer

Suggested Answer: A

by Blondell at Aug 18, 2022, 04:02 PM

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Tijuana

7 months ago

IPOs can be expensive, not sure they minimize costs.

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Maybelle

7 months ago

Wait, are we sure this project is guaranteed to enhance profitability?

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Isabelle

7 months ago

A term loan seems risky with the gearing level.

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Levi

7 months ago

I think redeemable preference shares could work too.

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Cletus

8 months ago

Convertible loan stocks are a solid choice!

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Ronny

8 months ago

A term loan might have higher costs and repayment obligations, which doesn't really align with minimizing cash outflows.

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Alverta

8 months ago

Redeemable preference shares seem like they could avoid immediate cash repayments, but I worry about how they affect long-term gearing.

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Alpha

8 months ago

I'm not entirely sure, but I think an IPO could be costly and might not help with the gearing issue.

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Melinda

8 months ago

I remember that convertible loan stocks can be a good option since they can convert to equity later, which might help with cash flow.

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Graciela

8 months ago

Wait, I'm a bit confused. Is multi-connectivity per user equipment also one of the key factors? I know 5G has some cool new features, but I'm not 100% sure which ones specifically impact throughput capacity. I'll have to think this through carefully.

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Octavio

8 months ago

No problem, I've got this. The key is to focus on the details in each image and match them up with the descriptions. I'm confident I can get the right answer.

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