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AAFM Exam CWM_LEVEL_2 Topic 5 Question 73 Discussion

Actual exam question for AAFM's CWM_LEVEL_2 exam

Question #: 73
Topic #: 5

[All CWM_LEVEL_2 Questions]

Section C (4 Mark)

Read the senario and answer to the question.

Saxena is considering an attractive investment proposal in which he is being offered two different cash flow choices at the same initial investment of Rs. 2,00,000. According to you which one should he opt for assuming Risk Free Interest Rate is the required rate of return?

APlan A should be opted since it has a higher Future Value.

BPlan B should be opted since it has a lower Present Value.

CPlan B should be opted since it has a higher Present Value.

DPlan B should be opted since it has a lower Future Value.

Show Suggested Answer

Suggested Answer: C

by Geoffrey at Mar 16, 2024, 03:27 PM

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Cecilia

10 months ago

That's a good point, Lindsey. I think it depends on the required rate of return. Plan A may be better in certain scenarios.

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Lindsey

10 months ago

But what if the Risk Free Interest Rate is high? Wouldn't Plan A be more profitable in that case?

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Luisa

10 months ago

I agree with Mi. Plan B is the better choice because it has a higher Present Value.

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Mi

11 months ago

I disagree with you, Jenelle. I believe Plan B should be opted since it has a higher Present Value.

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Jenelle

11 months ago

I think Saxena should opt for Plan A because it has a higher Future Value.

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Tiera

11 months ago

I think Plan B should be opted since it has a higher Present Value, making it more attractive.

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Sylvie

11 months ago

I agree with Stevie, Plan A seems like the better option with a higher Future Value.

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Lourdes

12 months ago

I disagree, I believe Plan B should be chosen since it has a lower Present Value.

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Stevie

12 months ago

I think Saxena should opt for Plan A because it has a higher Future Value.

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