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

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Evelynn

1 months ago

Perfect information, huh? Sounds like a dream come true. I wonder if they sell that at the company store? 'Perfect information' - now in a handy, pocket-sized edition!

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Sherell

23 hours ago

A) $13,350 seems like a good deal for perfect information.

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Alberto

2 months 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!

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Eleonore

That seems like too much to pay for perfect information.

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Cecilia

16 days ago

I think the company should pay for perfect information.

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Brice

2 months ago

A) $13,350

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Denna

2 months 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.

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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.

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Jettie

1 months ago

I agree, the maximum amount the company should pay for perfect information is the expected value of the information.

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Elise

1 months ago

I think the correct answer is C) $16,500.

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Alica

2 months ago

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

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Craig

3 months ago

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

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Huey

3 months ago

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

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

Contribute your Thoughts:

Evelynn

Sherell

Alberto

Eleonore

Christoper

Cecilia

Brice

Denna

Dominic

Jettie

Elise

Alica

Craig

Huey