AACE International CCP Exam - Topic 6 Question 21 Discussion

Actual exam question for AACE International's CCP exam

Question #: 21
Topic #: 6

[All CCP Questions]

A used concrete pumping truck can be purchased for $125,000. The operation costs are expected to be $65,000 the first year and increase 5% each year thereafter. As a result of the purchase, the company will see an increase in income of $100,000 the first year and 5% more each subsequent year. The company uses straight-line depreciation. The truck will have a useful life of five (5) years and no salvage value. Management would like to see a 10% return on any investment. The company's tax rate is 28%.

Student will receive scholarship when the GPA is within top 2%. The mean GPA is 2.8 and standard deviation is 0.5.

How high must the GPA be to qualify for the scholarship?

A3.62

B3.35

C3.91

D3.83

Show Suggested Answer

Suggested Answer: A

To find the GPA that qualifies for the top 2%, we use the inverse of the standard normal distribution (Z-table). The Z-score corresponding to the top 2% is approximately 2.05. Given the mean GPA is 2.8 with a standard deviation of 0.5, we calculate the threshold GPA as follows:

GPA=+Z=2.8+2.050.5=2.8+1.025=3.62\text{GPA} = \mu + Z \times \sigma = 2.8 + 2.05 \times 0.5 = 2.8 + 1.025 = 3.62GPA=+Z=2.8+2.050.5=2.8+1.025=3.62

Thus, a GPA of 3.62 is needed to qualify for the scholarship.

by Asarudeen at Feb 14, 2025, 04:03 PM

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Venita

3 months ago

Wow, I didn't think it would be that high!

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Adaline

3 months ago

3.62 makes sense with the mean and SD.

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Alethea

3 months ago

Wait, are you sure it's not higher?

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Annice

4 months ago

I totally agree, that sounds about right.

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Vonda

4 months ago

The top 2% GPA cutoff is around 3.62!

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Lauran

4 months ago

I feel like I’ve seen a question like this before, and I think the answer is definitely higher than 3.5, so maybe it’s 3.83?

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Gary

4 months ago

If the mean is 2.8 and the standard deviation is 0.5, I think the GPA for the top 2% should be around 3.62, but I’m not completely certain.

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Marylou

4 months ago

I think to find the GPA for the top 2%, we need to use the mean and standard deviation, but I’m a bit confused about the z-score.

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Elza

5 months ago

I remember we did a similar problem about GPA thresholds in class, but I’m not sure how to calculate the top 2% exactly.

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Mozell

5 months ago

Alright, I think I've got a handle on this. The key is breaking it down into the financial analysis and the GPA piece. If I can nail the financial side, then I can use that to determine the required GPA. Feeling pretty confident I can tackle this exam question.

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Melda

5 months ago

This looks challenging, but I've got a plan. First I'll calculate the net present value of the truck investment to see if it meets the 10% return. Then I'll figure out the GPA needed to qualify for the scholarship based on the provided stats. Gotta stay focused and work through it systematically.

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Corrie

5 months ago

Hmm, the GPA part of the question is throwing me off a bit. I'm not sure how that ties into the financial analysis. I'll need to make sure I understand how the GPA requirement factors into the overall problem.

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Catalina

5 months ago

Okay, let's see here. We've got a used concrete pumping truck, some operating costs and income projections, straight-line depreciation, and a required 10% return on investment. Seems like a lot of moving parts, but I think I can work through this step-by-step.

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Bok

5 months ago

This question looks pretty complex with all the financial calculations involved. I'll need to carefully read through the details and make sure I understand the key information before trying to solve it.

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Gladys

1 year ago

I'm not sure, but I think 3.62 makes sense based on the mean and standard deviation provided.

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Myrtie

1 year ago

Wait, the question is about a concrete pumping truck, not GPA? I must have misread something. I'm going to go with C) 3.91 just to be on the safe side. Who knows, maybe it's a trick question!

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Miesha

1 year ago

This question is making my brain hurt. I'm just going to go with A) 3.62 and hope for the best. At least it's not as high as C) 3.91 - that's just ridiculous!

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