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

- Free Preparation Discussions

IMANET Exam CMA Topic 1 Question 109 Discussion

Actual exam question for IMANET's CMA exam

Question #: 109
Topic #: 1

[All CMA Questions]

The discount rate ordinal' used in present value calculations is the

AFederal Reserve rate

BTreasury bill rate.

CMinimum desired rate of return set by the firm.

DPrime rate.

Show Suggested Answer

Suggested Answer: B

If the 8% return exactly equals the present value of the future flows ., NPV is zero), then simply determine the present value of the future inflows. Thus, Hopkins Company's initial cash outlay is $19,090 [($2,500)(PVIFA at 8% for 10 periods) + ($5J00)(PVlF at 8% for 10 periods ($2,500)(6.710) + ($5,000)(.463)].

by Lina at Mar 23, 2025, 06:53 PM

Limited Time Offer

25%

Off

Get Premium CMA Questions as Interactive Web-Based Practice Test or PDF

Contribute your Thoughts:

Submit Cancel

Roslyn

7 days ago

I think the Treasury bill rate is the right answer here. It's a common proxy for the risk-free rate used in present value calculations.

upvoted 0 times

...

Kerry

14 days ago

The discount rate is definitely the minimum desired rate of return set by the firm. That's what we've been learning in our finance classes.

upvoted 0 times

...

Edwin

16 days ago

That makes sense, the firm's desired rate of return would be more relevant for present value calculations.

upvoted 0 times

...

Lacresha

22 days ago

I disagree, I believe it is the Minimum desired rate of return set by the firm.

upvoted 0 times

...

Edwin

23 days ago

I think the discount rate ordinal used in present value calculations is the Treasury bill rate.

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