CIMA Exam CIMAPRA19-F02-1 Topic 1 Question 77 Discussion

Actual exam question for CIMA's CIMAPRA19-F02-1 exam

Question #: 77
Topic #: 1

GH issued a 6% debenture for $1,000,000 on 1 January 20X4. A broker fee of $50,000 was payable in respect of this issue. The effective interest rate associated with this debt instrument is 7.2%.

The carrying value of the debenture at 31 December 20X4 is:

A$958,400

B$1,065,600

C$1,012,000

D$961,400

Show Suggested Answer

Suggested Answer: A, B, C, D

by Diane at Nov 23, 2023, 11:07 PM

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Laura

1 months ago

I'm pretty sure I know the answer, but I'm going to double-check my work just to be sure.

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Ngoc

1 months ago

Ha! This question is a real brain-teaser. I bet the answer will surprise me.

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Bettina

2 days ago

C) $1,012,000

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Jesusita

9 days ago

B) $1,065,600

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Judy

21 days ago

A) $958,400

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Chaya

1 months ago

Okay, let me try to work this out step-by-step. The effective interest rate is 7.2%, so I need to use that to calculate the carrying value.

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Anthony

2 months ago

Wow, this question is tricky! I'm not sure if I can figure out the carrying value based on the given information.

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Shantell

3 days ago

A) $958,400

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Kanisha

6 days ago

I'm leaning towards C) $1,012,000 because of the effective interest rate.

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Shalon

15 days ago

C) $1,012,000

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Marg

16 days ago

I'm not sure about that, I think it's A) $958,400.

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Lavonna

1 months ago

B) $1,065,600

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Amie

1 months ago

I think it's A) $958,400 because the broker fee is deducted from the principal amount.

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Desire

2 months ago

A) $958,400

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Marnie

2 months ago

That's a good point, I didn't consider the broker fee. You might be right.

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Gabriele

3 months ago

I disagree, I believe the answer is B) $1,065,600 because the broker fee should be added to the principal amount.

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Marnie

3 months ago

I think the answer is A) $958,400 because the effective interest rate is lower than the coupon rate.

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