CIMA Exam CIMAPRO19-P01-1 Topic 4 Question 76 Discussion

Actual exam question for CIMA's CIMAPRO19-P01-1 exam

Question #: 76
Topic #: 4

JDM is considering whether to go ahead with the launch of a new product. Profit from the new product is dependent on the level of demand.

The following table shows the estimated profits and their respective probabilities at different levels of demand.

The company could still cancel the launch of the product but would incur a cost of $7,000.

What is the maximum amount that the company should pay for perfect information about demand for the product?

A$13,350

B$41,000

C$16,500

D$37,850

Show Suggested Answer

Suggested Answer: A, D, E

References:

by Wynell at Oct 22, 2023, 12:04 PM

Limited Time Offer

25%

Off

Get Premium CIMAPRO19-P01-1 Questions as Interactive Web-Based Practice Test or PDF

Contribute your Thoughts:

Submit Cancel

Alberto

2 days ago

This is a classic decision theory problem. I bet the prof who wrote this question is a real stickler for details. Better double-check those probabilities!

upvoted 0 times

...

Denna

3 days ago

I'm not sure about this one. The question seems straightforward, but the numbers are a bit tricky. I'll have to do some calculations to figure out the right answer.

upvoted 0 times

...

I think the correct answer is C) $16,500. The maximum amount the company should pay for perfect information is the expected value of the information, which is the difference between the expected profit with perfect information and the expected profit without it.

upvoted 0 times

...

Alica

16 days ago

I believe the maximum amount the company should pay is $41,000 for perfect information.

upvoted 0 times

...

Craig

23 days ago

I agree with Huey. It's important to make an informed decision.

upvoted 0 times

...

Huey

24 days ago

I think the company should pay for perfect information to maximize profits.

upvoted 0 times

...

CIMA Exam CIMAPRO19-P01-1 Topic 4 Question 76 Discussion

Contribute your Thoughts:

Alberto

Denna

Dominic

Alica

Craig

Huey