IMANET Exam CMA Topic 6 Question 105 Discussion

Actual exam question for IMANET's CMA exam

Question #: 105
Topic #: 6

[All CMA Questions]

A project requires an initial cash investment at its inception of $10,000, and no other cash outflows are necessary. Cash inflows from the project over its 3-year life are $6,000 at the end of the first year, $5,000 at the end of the second year, and $2,000 at the end of the third year. The future value interest factors for an amount of $1 at the firm's desired rate of return of 8% are

The present value interest factors for an amount of $1 for three periods are as follows:

The modified IRR (MIRR)for the project is closest to

A8%

B9%

C10%

D12%

Show Suggested Answer

Suggested Answer: D

Once an old piece of equipment has been disposed of, its histoncal cost no longer has an impact on a firms cash flows.

by Tamera at Jan 10, 2025, 03:35 AM

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Mariann

1 months ago

I'm feeling confident about this one. It's like a math puzzle, and I love solving those!

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Jenifer

6 days ago

A) 8%

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Nicolette

1 months ago

Wait, what's the MIRR again? I should probably brush up on my financial formulas before the exam.

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Irving

16 days ago

A) 8%

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Therese

1 months ago

This question is perfect for the exam. It's challenging, but the information provided is clear and concise.

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Reuben

4 days ago

A) 8%

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Tawny

2 months ago

Hmm, the MIRR calculation seems tricky. I'd better double-check my work to make sure I get the right answer.

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Felicitas

8 days ago

I believe it's option C) 10%. What do you think?

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Elfriede

13 days ago

So, based on the cash flows and the required rate of return, we can calculate the MIRR to determine if the project is worth pursuing.

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Larae

19 days ago

So, which answer option do you think is closest to the MIRR for this project?

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Janae

29 days ago

Yes, that's correct. The MIRR takes into account the cost of capital and reinvestment rate. It provides a more accurate picture of the project's profitability.

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Cecil

1 months ago

That's correct. It's a more accurate measure of profitability compared to IRR.

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Alesia

1 months ago

I think the MIRR formula takes into account both the cost of the project and the reinvestment rate.

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Francis

1 months ago

I think the MIRR calculation involves adjusting for the cost of financing. It's not just a simple IRR calculation.

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Alesia

2 months ago

Okay, let's see... The given information includes the initial cash investment, cash inflows over the project's 3-year life, and the future value interest factors. I think I can work this out.

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