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CIMA F2 Advanced Financial Reporting F2 Question # 1 Topic 1 Discussion

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CIMA F2 Advanced Financial Reporting F2 Question # 1 Topic 1 Discussion

F2 Exam Topic 1 Question 1 Discussion:
Question #: 1
Topic #: 1

FG has a weighted average cost of capital of 12% based on its existing:

• level of gearing of 30% (measured as debt/(debt + equity)); and

• business operations.

This would be used as an appropriate discount factor to assess which of the following significant projects?
A.

A project in an industry in which FG does not currently operate, funded wholly by equity.

B.

A project to extend FG's existing operations, funded wholly by debt.

C.

A project in an industry in which FG does not currently operate, funded 30% with debt and 70% with equity.

D.

A project to extend FG's existing operations, funded 30% with debt and 70% with equity.

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Actual exam question for CIMA F2 exam by Lumen9479 at Aug 3, 2025, 12:00:00 AM

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