AGA Exam CGFM Topic 2 Question 25 Discussion

Actual exam question for AGA's CGFM exam

Question #: 25
Topic #: 2

[All CGFM Questions]

A township wants to buy a new piece of equipment that will reduce costs by $20,550 at the end of year 2. If the

township could invest its funds at a rate of 10%, what is the most the township should spend now to get the return it

desires?

A$16,440

B$16,983

C$18,495

D$20,550

Show Suggested Answer

Suggested Answer: D

by Kattie at Feb 25, 2023, 12:00 PM

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Mindy

Haha, I bet the township treasurer is just trying to get a new golf cart with this 'equipment' purchase. Either way, the answer is definitely B. $16,983.

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Haydee

2 days ago

Hmm, I'm not so sure about that. Didn't they say the township wants to 'reduce costs'? I think the answer might be C. $18,495 to get that cost reduction.

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Linwood

17 days ago

I agree with Dortha, we need to calculate the present value of the future savings to determine the most the township should spend now.

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Hoa

17 days ago

I'm pretty sure the answer is B. $16,983 seems like the most the township should spend now to get the desired return of $20,550 at the end of year 2 with a 10% investment rate.

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Dortha

24 days ago

I disagree, I believe the answer is A) $16,440 because we need to consider the present value of the future savings.

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Antonio

25 days ago

I think the answer is D) $20,550.

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