CIMA Exam CIMAPRA19-F03-1 Topic 6 Question 87 Discussion

Actual exam question for CIMA's CIMAPRA19-F03-1 exam

Question #: 87
Topic #: 6

[All CIMAPRA19-F03-1 Questions]

Company ABC is planning to bid forcompanyDDD, an unlisted company in an unrelated industry sector to ABC.

The directors of ABC are considering a number of different valuation methods for DDDbefore making a bid.

Which of the following is the MOST appropriate method for ABC to use to value DDD?

AUsing DDD's tangible assets.

BApplying an industry P/E ratio to DDD's forecast earnings.

CDiscounting DDD's forecast cash flows using ABC's cost of equity.

DApplying Company ABC's P/E ratio to DDD's forecast earnings.

Show Suggested Answer

Suggested Answer: A, B, E

by Terrilyn at May 18, 2024, 10:01 PM

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7 days ago

I see your point, Wai, but I still think option D is the best choice as it reflects Company ABC's performance.

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8 days ago

I disagree, I believe option B is better because it takes into account industry standards.

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16 days ago

I think option C is the most appropriate method.

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