AAFM CWM_LEVEL_2 Exam - Topic 5 Question 73 Discussion

Actual exam question for AAFM's CWM_LEVEL_2 exam

Question #: 73
Topic #: 5

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

Limited Time Offer

25%

Off

Get Premium CWM_LEVEL_2 Questions as Interactive Web-Based Practice Test or PDF

Contribute your Thoughts:

Submit Cancel

King

3 months ago

Surprised that Future Value is the main focus here!

upvoted 0 times

...

Wenona

4 months ago

I think Plan B is the safer bet overall.

upvoted 0 times

...

Flo

4 months ago

Wait, isn't a higher Present Value usually the goal?

upvoted 0 times

...

Justine

4 months ago

I disagree, lower Present Value is better for cash flow.

upvoted 0 times

...

Terrilyn

4 months ago

Plan A has the higher Future Value, so it makes sense!

upvoted 0 times

...

Rosita

4 months ago

I’m confused about the relationship between present and future values. Does a lower present value mean it's a worse investment? I need to think this through.

upvoted 0 times

...

Dominga

5 months ago

I feel like I should choose Plan A because it has a higher future value, but I can't recall if that's always the best indicator.

upvoted 0 times

...

Alpha

5 months ago

I think we practiced a similar question where we had to choose based on present value. If Plan B has a higher present value, it might be the better option.

upvoted 0 times

...

Frank

5 months ago

I remember we discussed how to compare cash flows using present and future values, but I'm not sure which plan is better in this case.

upvoted 0 times

...

Leana

5 months ago

I'm a bit confused here. Should I be looking at the future value or the present value? The question mentions both, and I'm not sure which one is more important for this decision.

upvoted 0 times

...

Mattie

5 months ago

Okay, I think I understand the scenario. We need to compare the two cash flow options and choose the one that has the higher present value, since the required rate of return is the risk-free interest rate.

upvoted 0 times

...

Cristal

5 months ago

Hmm, this looks like a time value of money problem. I'll need to calculate the present value and future value of each plan to determine which one has the higher value.

upvoted 0 times

...

Yuonne

5 months ago

I've got this! The key is to focus on the present value of each plan, since the required rate of return is the risk-free interest rate. Plan B has the higher present value, so that's the one Saxena should choose.

upvoted 0 times

...

Jettie

5 months ago

I'm feeling pretty confident about this one. The requirement to maintain access to the application even with a load balancer failure points to needing redundancy, which means the load balancers should be in different areas.

upvoted 0 times

...

Leeann

5 months ago

This seems like a straightforward question. The "nature of work" section on a job description would typically include the duties and responsibilities of the role, so I'm going with C.

upvoted 0 times

...