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AHIP AHM-520 Exam - Topic 6 Question 120 Discussion

Actual exam question for AHIP's AHM-520 exam
Question #: 120
Topic #: 6
[All AHM-520 Questions]

In order to print all of its forms in-house, the Prism health plan is considering the purchase of 10 new printers at a total cost of $30,000. Prism estimates that the proposed printers have a useful life of 5 years. Under its current system, Prism spends $10,000 a year to have forms printed by a local printing company. Assume that Prism selects a 15% discount rate based on its weighted-average costs of capital. The cash inflows for each year, discounted to their present value, are shown in the following chart:

Prism will use both the payback method and the discounted payback method to analyze the worthiness of this potential capital investment. Prism's decision rule is to accept all proposed capital projects that have payback periods of four years or less.

Now assume that Prism decides to use the net present value (NPV) method to evaluate this potential investment's worthiness and that Prism will accept the project if the project's NPV is greater than $4,000. Using the NPV method, Prism would correctly conclude that this project should be

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Suggested Answer: A

by Paola at Jan 05, 2026, 05:16 AM

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Lindsey
2 days ago
D) Accepted because its NPV is $23,520 - that's a huge return! Sign me up for that printer party!
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Kimberlie
7 days ago
With a 15% discount rate, this investment looks like a pretty solid deal. I'd go with B as well.
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Tori
29 days ago
Haha, I bet the folks at Prism are really printer-happy with this decision!
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Rene
1 month ago
The NPV of $5,028 is greater than the $4,000 threshold, so I agree that this project should be accepted.
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Alberta
1 month ago
B) Accepted because its NPV is $5,028 seems like the correct answer here.
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Tandra
1 month ago
I feel confident that if the NPV is $5,028, it should definitely be accepted. I think that aligns with the decision rule we learned.
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Maybelle
2 months ago
I recall that the NPV needs to be greater than $4,000 for acceptance, but I can't remember how to calculate the present value of the cash inflows correctly.
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Kate
2 months ago
I think we practiced a similar question where we had to determine if a project should be accepted based on its NPV. I feel like the answer might be B or C.
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Gracia
2 months ago
I remember we discussed how to calculate NPV in class, but I'm not sure how to apply it to this specific scenario.
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Carri
2 months ago
I feel pretty confident about this one. The information provided seems clear, and I think I can work through the NPV calculation accurately.
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Elmira
2 months ago
This looks straightforward enough. I just need to plug the numbers into the NPV formula and see if the result is greater than $4,000.
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Genevieve
2 months ago
I'm a little confused by the different analysis methods mentioned. I'll need to make sure I understand the payback and NPV approaches before deciding on the answer.
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Viva
3 months ago
Okay, let me think this through step-by-step. The key is to calculate the present value of the cash inflows and compare that to the initial $30,000 investment.
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Marshall
3 months ago
Hmm, this seems like a tricky one. I'll need to carefully work through the cash flows and discount rates to figure out the NPV.
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