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CIMA Exam CIMAPRO19-P03-1 Topic 3 Question 31 Discussion

Actual exam question for CIMA's CIMAPRO19-P03-1 exam
Question #: 31
Topic #: 3
[All CIMAPRO19-P03-1 Questions]

A project has an NPV of 1,200,000. The present value of material costs which are included in the NPV calculation are 8,000,000.

What is the sensitivity of the project to changes in material costs?

Give your answer to the nearest whole percentage.

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Suggested Answer: A, B, D

by Theodora at May 09, 2022, 07:17 PM

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Marvel
40 minutes ago
Okay, let's think this through. The NPV is 1,200,000 and the present value of material costs is 8,000,000. The sensitivity of the project to changes in material costs would be the percentage change in NPV relative to the percentage change in material costs. That sounds like the right approach.
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Art
18 days ago
I agree with William, the project's NPV is heavily dependent on material costs, so the sensitivity is likely higher than 15%.
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William
20 days ago
I disagree, I believe the sensitivity is higher than 15% because the NPV is significantly affected by material costs.
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Gladys
22 days ago
I think the sensitivity of the project to changes in material costs is 15%.
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