Deal of The Day! Hurry Up, Grab the Special Discount - Save 25% - Ends In 00:00:00 Coupon code: SAVE25

- Free Preparation Discussions

CIMA Exam CIMAPRA19-P03-1 Topic 4 Question 65 Discussion

Actual exam question for CIMA's CIMAPRA19-P03-1 exam

Question #: 65
Topic #: 4

[All CIMAPRA19-P03-1 Questions]

Having carried out a full capital appraisal for a construction project, HCompanyhasapproved the project with initial outflows of $6,000,000 anda net present value of $1,200,000.

The implementation phase has been commenced with 25% of the costs already committed.However whenthe ground was opened, an underground waterway was revealedwhich will need to be diverted if the project is to proceed. Work to carry out this diversion has been estimated at $1,300,000.

Which of the following factors will define whether the project should go ahead or not?

AThe project actually has a higher NPV than before.

BThe project now has a negative NPV.

CAbandoning the project will have an adverse effect on shareholder confidence.

DThere will be abandonment costs to restore the site.

EThere may be other unexpected costs to be met if the project continues.

Show Suggested Answer

Suggested Answer: A, B, C

by Edison at Feb 06, 2025, 08:21 AM

Limited Time Offer

25%

Off

Get Premium CIMAPRA19-P03-1 Questions as Interactive Web-Based Practice Test or PDF

Contribute your Thoughts:

Submit Cancel

Nan

4 days ago

The question is asking about the factors that will define whether the project should go ahead or not. I think option B is the correct answer - the negative NPV is the key factor here.

upvoted 0 times

...

Ezekiel

15 days ago

This is a tricky one. The project was initially approved, but now there's a major unexpected cost. Shareholder confidence is definitely a factor to consider.

upvoted 0 times

...

Shenika

16 days ago

Hmm, the project has already incurred significant costs, but the NPV is now negative. I wonder if the additional cost of diverting the waterway will outweigh the expected benefits.

upvoted 0 times

...

Antonio

17 days ago

True, that could impact the project's NPV. We need to consider all factors before making a decision.

upvoted 0 times

...

Felicitas

20 days ago

But what about the additional cost of diverting the underground waterway?

upvoted 0 times

...

Antonio

21 days ago

I think the project should still go ahead.

upvoted 0 times

...

az-700 pass4success az-104 200-301 200-201 cissp 350-401 350-201 350-501 350-601 350-801 350-901 az-720 az-305 pl-300

Warning: Cannot modify header information - headers already sent by (output started at /pass.php:70) in /pass.php on line 77