CIMA Financial Strategy F3 Question # 103 Topic 11 Discussion

CIMA Financial Strategy F3 Question # 103 Topic 11 Discussion

F3 Exam Topic 11 Question 103 Discussion:
Question #: 103
Topic #: 11

Company A has a cash surplus.

The discount rate used for a typical project is the company's weighted average cost of capital of 10%.

No investment projects will be available for at least 2 years.

 

Which of the following is currently most likely to increase shareholder wealth in respect of the surplus cash?


A.

Investing in a 2 year bond returning 5% each year.


B.

Investing in the local money market at 4% each year.


C.

Maintaining the cash in a current account.


D.

Paying the surplus cash as a dividend at the earliest opportunity.


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