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IMANET Exam CMA Topic 4 Question 91 Discussion

Actual exam question for IMANET's CMA exam
Question #: 91
Topic #: 4
[All CMA Questions]

What strategy induces intermediaries to promote and sell the firm's products?

Show Suggested Answer Hide Answer
Suggested Answer: B

The cash flows of Plan A are discounted at 12%, the company's cost of capital for average risk projects. Plan B is evaluated with a lower cost of capital that reflects a greater risk of the cash outflow of the project. Thus, the cash flows of Plan B are discounted at 10% (12% --- 2%). the company's adjusted cost of capital for high risk projects. The net present value of each plan is the initial cost plus the present value of an annuity for 10 years at the appropriate rate multiplied times the annual operating cost.

The present value factors are found in the tools section of CMA Test Prep.

Plan A NPV = $10,000,000 + ($1,000,000 x 5.650)

Plan A NPV = $15,650,000

Plan B NPV = $5,000,000 + ($2,000,000 x 6.145)

Plan B NPV = $17,290,000

Plan A has a lower NPV and thus is the better project.


Contribute your Thoughts:

Alona
23 days ago
Hold up, is this a trick question? What if the answer is none of the above, and we're supposed to come up with an even better strategy? The suspense is killing me!
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Domitila
25 days ago
I'm leaning towards B. Push. It's like my grandpa always said, 'You gotta give 'em a nudge to get them moving!'
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Kiera
4 days ago
I think push strategy is more direct and can really motivate intermediaries to take action.
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Eleonora
12 days ago
I agree, push strategy can be really effective in getting intermediaries to promote and sell products.
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Ula
1 months ago
Hmm, I'm not so sure. Maybe the pull strategy would work better? Let's get the customers asking for our products, and the intermediaries will have no choice but to sell them.
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Julene
25 days ago
I think you're right, the pull strategy could be more effective in getting intermediaries to promote our products.
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Johnna
2 months ago
I'm going with B. Push. Can't go wrong with a good old-fashioned push, right? Get those middlemen hyped and make those sales happen!
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Nana
19 days ago
Yeah, I agree. Pushing the products to the intermediaries can really help boost sales.
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Amos
28 days ago
I think B) Push is a solid choice. It's all about getting the intermediaries motivated to sell.
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Deeanna
2 months ago
That's a good point, but I still think Push is more effective in getting intermediaries to promote the products.
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Estrella
2 months ago
I disagree, I believe it's A) Pull because it attracts customers to the product.
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Bernadine
2 months ago
The push strategy seems like the obvious choice here. Gotta get those intermediaries to really push our products, you know?
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Altha
1 days ago
B) Push.
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Allene
8 days ago
A) Pull.
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Deeanna
2 months ago
I think the answer is B) Push.
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