CIMA Exam CIMAPRO19-P02-1 Topic 8 Question 91 Discussion

Actual exam question for CIMA's CIMAPRO19-P02-1 exam

Question #: 91
Topic #: 8

A company is investing $200,000 in a project which will generate a cash flow of $60,000 each year for five years starting immediately. The company's cost of capital is 7%.

The net present value of the investment to the nearest $100 is $

A63200

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Suggested Answer: A, C, D

by Leatha at Jun 29, 2024, 07:19 AM

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Anika

1 months ago

I wonder if the company is investing in a time machine to get those cash flows. That would be a real money-maker!

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Chanel

11 days ago

That would be amazing if they had a time machine! But let's focus on the numbers. What do you think the net present value is?

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2 months ago

This seems like a straightforward time value of money problem. I'll plug the numbers into the NPV formula and see what I get.

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Raelene

1 months ago

I got an NPV of $63,200. Looks like option A is the correct answer.

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Alline

1 months ago

Let's calculate the NPV using the formula.

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Leslee

2 months ago

I'm not sure about the answer. Can someone explain how the net present value is calculated in this case?

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Lavonna

2 months ago

I agree with Bok. The net present value calculation is based on the discounted cash flows using the cost of capital.

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Bok

3 months ago

I think the answer is A) 63200.

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