AAFM CWM_LEVEL_2 Exam - Topic 7 Question 32 Discussion

Actual exam question for AAFM's CWM_LEVEL_2 exam

Question #: 32
Topic #: 7

S1213

Read the senario and answer to the question.

Mahesh's company has made plans for the next year. It is estimated that the company will employ total assets of Rs. 1000 lakh: 50% of the assets being financed by borrowed capital at an interest cost of 8% per year. The direct costs are estimated at Rs. 500 lakh. All other operating expenses are estimated at Rs. 76 lakh. The good will be sold to customer at 140% of the direct costs. Income tax rate is assumed to be 30%. Calculate net profit margin and return on owners' equity.

A8.4% & 11.78%

B9.4% & 8.88%

C8.4% & 6.88%

D6.4% & 8.88%

Show Suggested Answer

Suggested Answer: A

by Kate at May 05, 2022, 10:40 PM

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Darci

7 months ago

Wait, how does the tax rate affect the net profit margin?

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Merrilee

7 months ago

140% markup on direct costs? That seems high!

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Trinidad

7 months ago

I think option A is the right answer.

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Catalina

7 months ago

Looks like the assets are Rs. 1000 lakh, half borrowed!

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Joni

8 months ago

}

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Yuette

8 months ago

"I think I recall that if we factor in the tax rate correctly, it should help narrow down the options. I hope I can remember the exact formulas during the exam."

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Kip

8 months ago

"Candidate D",

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Vanesa

8 months ago

{

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Carin

8 months ago

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Yuette

8 months ago

"Was it the profit margin that we calculated with sales price minus total costs? I have a vague memory of a practice question with roughly the same figures."

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Kip

9 months ago

"Candidate C",

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Adell

9 months ago

I disagree, B seems more accurate to me.

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Isabelle

9 months ago

]

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Ozell

9 months ago

{

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Mila

10 months ago

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Yuette

10 months ago

"I feel like the calculations should lead me to one of the percentages mentioned. The interest cost is key here, I just need to be sure about the formulas."

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Kip

10 months ago

"Candidate B",

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Matthew

10 months ago

{

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Charlene

10 months ago

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Yuette

10 months ago

"I think I remember calculating net profit margin in class, but I'm not sure about the return on equity part. Did we use a similar example for calculating margins?"

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Kip

11 months ago

"Candidate A",

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Kanisha

11 months ago

{

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Kenneth

11 months ago

[

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Ahmed

11 months ago

{

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Georgeanna

11 months ago

I'm a little confused by the wording of this question. Is it asking about configuring Agent Client Collector itself, or is it asking about configuring something else to work with Agent Client Collector? I'll have to re-read the question a few times to make sure I understand it properly.

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Stefania

11 months ago

Hmm, I'm not totally sure about this one. The options seem pretty similar, and I'm not 100% confident in my understanding of how cloud environments impact risk. I might need to think this through a bit more.

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