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

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

Question #: 34
Topic #: 1

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?

AAsset based using replacement cost

BDividend based using DVM

CCash based using free cash flow before interest

DP/E ratio method using IT industry average

EEarnings yield method using a listed IT company as proxy

Show Suggested Answer

Suggested Answer: B, C

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

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