CIMA Exam CIMAPRA19-E03-1 Topic 5 Question 69 Discussion

Actual exam question for CIMA's CIMAPRA19-E03-1 exam

Question #: 69
Topic #: 5

BBB operates a national mobile phone (cell phone) network in one country. It is considering investing in upgrading its network to 4th Generation (4G) by providing an improved bandwidth that will enable its customers faster access to theInternet.

The investment will cost $29 millionwhich BBB's institutional investors have agreed to provide by subscribing to a rights issue. This is because management has informedinstitutional investorsthat a rival is already offering 4G and that this is taking customers away from BBB because BBB's network is now regarded as too slow. BBB's remaining customers have shown a willingness to pay extra for 4G and overall the investment will have a positive net present value.

Whichof the following statements are correct?

Select ALL that apply.

ABBB will gain a first mover advantage.

BIt provides a market development opportunity for BBB.

CThere is stakeholder approval for the investment.

DIt is essential given the strategic threats to BBB.

EThere are sufficient investment funds available.

Show Suggested Answer

Suggested Answer: C

by Kate at May 27, 2023, 07:46 PM

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Buddy

3 days ago

Haha, I bet the rival's 4G network is powered by a hamster on a wheel. BBB should just throw some extra wheels in there and call it a day!

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Noel

5 days ago

I'm not so sure. While the investment seems to have a positive net present value, I'm curious about the specifics of the market development opportunity. Is this really a sure thing, or could it backfire if the rival's 4G network is more advanced?

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Elenore

8 days ago

I also think option D is correct. Upgrading to 4G is essential to stay competitive in the market.

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Odette

9 days ago

I agree with Ammie. Option A makes sense as being the first to offer 4G can attract new customers.

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Ammie

11 days ago

I think option A is correct because BBB will gain a first mover advantage.

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Nobuko

13 days ago

Wow, this is a no-brainer! BBB is totally making the right move by upgrading to 4G. They'll get that first mover advantage and keep their customers happy. Plus, the funds are already secured, so what's the hold-up?

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