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Exam F3 All Questions
Exam F3 All Questions

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CIMA Strategic F3 Question # 22 Topic 3 Discussion

F3 Exam Topic 3 Question 22 Discussion:
Question #: 22
Topic #: 3

Company ABC is planning to bid for company DDD, an unlisted company in an unrelated industry sector to ABC.

 

The directors of ABC are considering a number of different valuation methods for DDD before making a bid.

 

Which of the following is the MOST appropriate method for ABC to use to value DDD?


A.

Using DDD's tangible assets.


B.

Applying an industry P/E ratio to DDD's forecast earnings.


C.

Discounting DDD's forecast cash flows using ABC's cost of equity.


D.

Applying Company ABC's P/E ratio to DDD's forecast earnings.


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