AccountingMocks

Rows of desks and chairs set out across an examination hall.

Two fixed mocks for your paper.

Opening soon. Pick your paper and we will email you the day its mocks go on sale.

One question, marked here

Marked by the same code the exam uses.

Northmoor Water plc is a regulated water utility. It is costing the sources of finance it will use for a long-term funding package. Using the capital asset pricing model, what is Northmoor's cost of equity at 31 March 20X9, to one decimal place?

Data for the question
Return on government treasury bills (risk free rate)	4.0%
Expected return on the market portfolio	10.0%
Equity beta of Northmoor Water plc	0.8
Corporate income tax rate, Northmoor Water plc	25%

Your answerA6.6%B8.8%C10.0%D12.0%

Find your paper

Every paper is here, whether its mocks are written yet or not. Pick yours and we will write to you once.

Find a paper in CIMA

Certificate level

Operational level

OCSOperational Case StudyWritten exam

Management level

MCSManagement Case StudyWritten exam

Strategic level

SCSStrategic Case StudyWritten exam

What you are waiting for

Three screens of the product, sat, marked and explained.

Sitting it

Sitting a timed mock: working through real exam questions with the clock running

9:41

F2Mock 11:12:40

12 of 608 answered2 flagged

Return on government treasury bills (risk free rate)	4.0%
Expected return on the market portfolio	10.0%
Equity beta of Northmoor Water plc	0.8

A6.6%

B8.8%

C10.0%

D12.0%

FlagNext

Marked, by topic

Marked results: a pass at 83 per cent, with a score-by-topic breakdown

Every miss explained

The tutor opening a missed question and explaining it line by line

9:41

F2Mock 1

Your mark

Wrong

Cost of equity under CAPM

A6.6%Your answer

B8.8%Correct

AI tutor

Ke = 4.0% plus 4.8% = 8.8%, so option B is correct. The 25% tax rate is in the table only as a distractor, because a cost of equity is a pre tax cost to the company and no relief attaches to dividends.

The candidate has worked the cost of equity correctly at 8.8% and then multiplied it by (1 minus 0.25) to allow for tax. Dividends are an appropriation of profit and carry no tax relief, so the cost of equity is never adjusted for tax. Only the cost of debt is stated after tax, because interest is deductible.

Next question

Or the whole site

One message when it opens, whichever paper you are sitting.

Questions are original, in the style of the assessments. Not affiliated with AAT, CIMA or ACCA.

Terms, privacy and refunds are published when the company is registered.