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CIMAPRA19-F03-1 Exam - Topic 7 Question 24 Discussion

An all equity financed company reported earnings for the year ending 31 December 20X1 of $5 million.One of its financial objectives is to increase earnings by 5% eachyear.In the year ending 31 December 20X2 itfinanced a project byissuing a bondwith a $1 million nominal value and a coupon rate of 7%.Thecompany payscorporate income taxat30%.If the company is to achieve its earnings target for the year ending 31 December 20X2, what is the minimum operating profit (profit before interest and tax) that it must achieve?
C) $7.57 million
A) $5.25 million
B) $7.50 million
D) $8.40 million

CIMAPRA19-F03-1 Exam - Topic 7 Question 24 Discussion

Actual exam question for CIMA's CIMAPRA19-F03-1 exam
Question #: 24
Topic #: 7
[All CIMAPRA19-F03-1 Questions]

An all equity financed company reported earnings for the year ending 31 December 20X1 of $5 million.

One of its financial objectives is to increase earnings by 5% eachyear.

In the year ending 31 December 20X2 itfinanced a project byissuing a bondwith a $1 million nominal value and a coupon rate of 7%.

Thecompany payscorporate income taxat30%.

If the company is to achieve its earnings target for the year ending 31 December 20X2, what is the minimum operating profit (profit before interest and tax) that it must achieve?

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Suggested Answer: C

by Mollie at May 05, 2022, 10:07 AM

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Tijuana
10 months ago
Don't forget the tax impact on those earnings!
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Ines
10 months ago
Definitely need at least $7.57 million to cover the interest.
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Markus
11 months ago
Wait, how does a bond affect earnings like that?
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Izetta
11 months ago
I think it’s higher than that, maybe $7.50 million?
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Maryann
11 months ago
The earnings target is $5.25 million for 20X2.
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Raylene
11 months ago
I think this one is pretty straightforward. Cloud Security Posture Management would need to integrate with IAM account credentials to access the cloud accounts.
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Rosalind
11 months ago
Okay, let's see here. The question is specifically asking about a business rule that creates a CI from a Vulnerable Item record, so I'm going to eliminate the options that don't mention that directly. That leaves me with A and D, and D seems to be the more specific and relevant answer.
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Tammara
11 months ago
I'm feeling pretty confident about this one. Based on the information provided, I think the issue is most likely related to the zoning configuration. I'll double-check that first.
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Barbra
11 months ago
Monitoring high-risk areas seems like it could be relevant, but I'm not sure if that's the BEST approach for communicating results. I'll have to weigh the other options as well.
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Carole
11 months ago
I think the answer is factorial experiment. We practiced a question similar to this where both factors were considered fully.
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