CIMA Financial Strategy F3 Question # 100 Topic 11 Discussion

CIMA Financial Strategy F3 Question # 100 Topic 11 Discussion

F3 Exam Topic 11 Question 100 Discussion:
Question #: 100
Topic #: 11

A profitable company wishes to dispose of a loss-making division that generated negative free cashflow in the last financial year.

The division requires significant new investment to return it to profitability.

 

Which of the following valuation approaches is likely to be the most useful to the company when negotiating the sales price?


A.

Dividend growth model


B.

Asset basis


C.

Discounted forecast free cashflow


D.

P/E ratio applied to forecast earnings next year


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