Free CIMA CIMAPRA19-F03-1 Exam Practice Questions & Explanations

Last updated on: Oct 21, 2026
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Question 1

A company based in Country A with the A$ as its functional currency requires A$500 million 20-year debt finance to finance a long-term investment The company has a high credit rating, but has not previously issued corporate bonds which are listed on the stock exchange Which THREE of the following are advantages of issuing 20 year bonds compared with simply borrowing for a 20 year period?

Answer Options
Correct Answer: A, B, E
Question 2

A company is considering whether to lease or buy an asset.

The following data applies:

* The bank will charge interest at 7.14% per annum

* The asset will cost $1 million

* Tax-allowable depreciation is available on a straight line basis over 5 years

* There is no residual value

* Corporatetaxis paid at 30% in the year when the profit is earned

What is the NPV of the buy option?

Give your answer to the nearest $000.

$?

Answer Options
Correct Answer: A
Question 3

TU has relatively few tangible assets and is dependent for profits and growth on the high-value individuals it employs. Which of the following statements best explains why the net asset valuator method's considered unstable for TU?

Answer Options
Correct Answer: B
Question 4

TTT pic is a listed company. The following information is relevant:

TTT pic's board is considering issuing new 6% irredeemable debt to re-purchase equity. This is expected to change TTT pic's debt to equity mix to 40: 60 by market value. The corporate tax rate is 20%.

What will be TTT pic's WACC following this change in capital structure?

Answer Options
Correct Answer: D
Question 5

The competition authorities are investigating the takeover of Company Z by a larger company, Company Y.

Both companies are food retailers.

The takeoverterms involve using a part cash, part share exchange means of payment.

CompanyZ is resisting the bid, arguing that it undervalues its business, while lobbying extensively among politicians to sway publicopinion against the bidder.

Which of the following actions by Company Y is most likely topersuade the competition authorities to approve the acquisition?

Answer Options
Correct Answer: B