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CIMAPRA19-F03-1 Exam - Topic 7 Question 121 Discussion

A company generates and distributes electricity and gas to households and businesses.Forecast results for the next financial year are as follows:The Industry Regulator has announced a new price cap of $2.00 per Kilowatt.The company expects this to cause consumption to rise by 15% but costs would remained unaltered.The price cap is expected to cause the company's net profit to fall to:
B) $164.00 million profit
A) $8.75 million profit
C) $43.00 million profit
D) $126.50 million loss

CIMAPRA19-F03-1 Exam - Topic 7 Question 121 Discussion

Actual exam question for CIMA's CIMAPRA19-F03-1 exam
Question #: 121
Topic #: 7
[All CIMAPRA19-F03-1 Questions]

A company generates and distributes electricity and gas to households and businesses.

Forecast results for the next financial year are as follows:

The Industry Regulator has announced a new price cap of $2.00 per Kilowatt.

The company expects this to cause consumption to rise by 15% but costs would remained unaltered.

The price cap is expected to cause the company's net profit to fall to:

Show Suggested Answer Hide Answer
Suggested Answer: B

by Michael at Mar 08, 2026, 12:47 PM

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Gracie
7 hours ago
I agree! I’m leaning towards option C. The profit drop seems realistic.
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Avery
5 days ago
This question is tricky! I think the price cap will hurt profits.
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Mary
11 days ago
Not so sure about that, seems too optimistic given the cap.
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Nina
16 days ago
I'm leaning towards option B, $164 million profit sounds right!
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Staci
2 months ago
Wait, how can costs stay the same with rising demand?
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Zana
2 months ago
I think consumption rising by 15% will help offset some losses.
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Ceola
2 months ago
Price cap at $2.00 per Kilowatt is a big change!
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Jody
3 months ago
I’m leaning towards option B, $164 million profit.
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Kimberlie
3 months ago
Totally agree, profit will definitely take a hit.
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Douglass
3 months ago
Really? A 15% rise in consumption but no cost changes? Sounds off.
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Amber
3 months ago
I think the profit will drop significantly.
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Gracia
3 months ago
Price cap at $2.00 per Kilowatt, wow!
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Louvenia
3 months ago
I think I recall that with the price cap, the profit could actually decrease despite higher consumption. I’m torn between options A and C, though.
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Bronwyn
4 months ago
I feel a bit uncertain about how the unchanged costs play into this. If consumption rises, wouldn't that typically mean more revenue?
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Valentin
4 months ago
This question seems similar to one we practiced where we had to adjust profits based on changes in pricing and demand. I think I might lean towards option B, but I need to double-check my calculations.
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Brunilda
4 months ago
I remember we discussed how price caps can affect profit margins, but I'm not sure how to calculate the new profit with the increased consumption.
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