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CIMAPRA19-F03-1 Exam - Topic 1 Question 34 Discussion

Company X is an established, unquoted company which providesIT advisory services.The company's results and cashflows are growing steadilyand it has few direct competitors due to the very specialised nature of it's business. Dividends are predictable and paid annually.Company Pis looking to buy 30% of company X's equity shares.Which TWO of the following methods arelikely to be consideredmostsuitable valuation methods for valuing company P's investment in Company X?
B) Dividend based using DVM and C) Cash based using free cash flow before interest
A) Asset based using replacement cost
D) P/E ratio method using IT industry average
E) Earnings yield method using a listed IT company as proxy

CIMAPRA19-F03-1 Exam - Topic 1 Question 34 Discussion

Actual exam question for CIMA's CIMAPRA19-F03-1 exam
Question #: 34
Topic #: 1
[All CIMAPRA19-F03-1 Questions]

Company X is an established, unquoted company which providesIT advisory services.

The company's results and cashflows are growing steadilyand it has few direct competitors due to the very specialised nature of it's business. Dividends are predictable and paid annually.

Company Pis looking to buy 30% of company X's equity shares.

Which TWO of the following methods arelikely to be consideredmostsuitable valuation methods for valuing company P's investment in Company X?

Show Suggested Answer Hide Answer
Suggested Answer: B, C

by Erinn at May 03, 2022, 09:11 AM

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Cordelia
10 months ago
Wait, are they really paying dividends annually? That's impressive!
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Emmett
10 months ago
A and D could work too, but I lean towards B for sure.
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Isaac
11 months ago
Not so sure about C, isn't it risky to use cash flows?
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Malinda
11 months ago
Totally agree, B makes a lot of sense with those dividends!
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Vincenza
11 months ago
I think B and C are the best options here.
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Vivan
11 months ago
I think I've got a handle on this. A and C seem like the most straightforward ones to me. I'll double-check my work, but I'm feeling pretty confident about those two.
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Nobuko
11 months ago
Interesting, I didn't consider checking the CloudTrail log. That could provide some valuable insights into what might have caused the issue in the first place. I'll keep that in mind as a potential next step.
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Wilford
11 months ago
Hmm, I'm not totally sure about this one. I know dictionary-based attacks are used to crack simple passwords, but I'm not 100% certain that's the right answer here.
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Arminda
11 months ago
I'm a bit stumped on this one. The options don't seem super clear to me. I'll have to review my notes on NAT and its extensions before I can make a confident guess.
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