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CIMAPRA17-BA1-1 Exam - Topic 1 Question 59 Discussion

A hairdressing salon can either invest in1. New. more comfortable chairs at a cost of $5,0002. New shop windows at a cost of $4,000Over the next five years. Investment 1 will generate an additional amount of profit whose present value is $6,000. while Investment 2 additional amount of profit whose present value is $5,500What is the net present value of the best project? Give your answer to the nearest whole dollar.
A) $1500
B) $1400
C) $1300
D) $1200

CIMAPRA17-BA1-1 Exam - Topic 1 Question 59 Discussion

Actual exam question for CIMA's CIMAPRA17-BA1-1 exam
Question #: 59
Topic #: 1
[All CIMAPRA17-BA1-1 Questions]

A hairdressing salon can either invest in

1. New. more comfortable chairs at a cost of $5,000

2. New shop windows at a cost of $4,000

Over the next five years. Investment 1 will generate an additional amount of profit whose present value is $6,000. while Investment 2 additional amount of profit whose present value is $5,500

What is the net present value of the best project? Give your answer to the nearest whole dollar.

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Suggested Answer: A

by Raul at Oct 12, 2022, 01:59 AM

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Gail
10 months ago
NPV for the chairs is $1500, definitely the better choice!
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Veronica
10 months ago
I think the windows could attract more customers, though.
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Makeda
10 months ago
Wait, are we sure about those profit figures?
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Bea
11 months ago
Totally agree, $1500 is the way to go!
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Arminda
11 months ago
Investment 1 has a higher net present value.
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Eun
11 months ago
I feel like I might have mixed up the present values and costs in my head. I hope I can figure out which investment is better!
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Salley
11 months ago
If I recall correctly, for Investment 1, the NPV should be $6,000 - $5,000, which gives $1,000. But I’m not sure about Investment 2.
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Odette
11 months ago
I think we practiced a similar question where we had to subtract the costs from the present value. I hope I can remember the exact numbers!
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Dottie
11 months ago
I remember calculating net present value in class, but I'm not sure if I got the formula right for this one.
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Thersa
11 months ago
Configuring a route reflector for the VPN NLRI seems like it could be a valid option too, but I'm not sure if that's the best approach for this specific scenario.
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Pearlene
11 months ago
I'm pretty confident this is the accrual basis of accounting. It records revenues and expenses when they're earned/incurred, not when cash changes hands.
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King
11 months ago
I think ELB stands for Elastic Load Balancing, but I'm not completely sure. I remember studying it in relation to scaling applications.
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