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CIMAPRA19-F03-1 Exam - Topic 6 Question 122 Discussion

Actual exam question for CIMA's CIMAPRA19-F03-1 exam
Question #: 122
Topic #: 6
[All CIMAPRA19-F03-1 Questions]

A company's Board of Directors is assessing the likely impact of financing future new projects using either equity or debt.

The directors are uncertain of the effects on key variables.

Which THREE of the following statements are true?

Show Suggested Answer Hide Answer
Suggested Answer: D, E, F

by Elinore at Apr 02, 2026, 10:33 AM

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Leonie
18 days ago
D) is true, debt does raise equity costs.
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Tran
23 days ago
A) is definitely false, tax impacts are real.
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Ines
1 month ago
D makes sense to me because if a company takes on more debt, it can increase the risk for equity holders, leading to a higher cost of equity.
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Wava
2 months ago
C sounds too absolute; I recall that debt isn't always preferable due to risks involved.
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Wynell
2 months ago
I’m not sure about B; I thought retained earnings do have an opportunity cost associated with them.
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Kathrine
2 months ago
I remember studying that debt can actually affect tax liabilities, so A seems incorrect.
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