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

Actual exam question for CIMA's CIMAPRA17-BA1-1 exam

Question #: 59
Topic #: 1

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.

A$1500

B$1400

C$1300

D$1200

Show Suggested Answer

Suggested Answer: A

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

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Gail

4 months ago

NPV for the chairs is $1500, definitely the better choice!

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Veronica

4 months ago

I think the windows could attract more customers, though.

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Makeda

4 months ago

Wait, are we sure about those profit figures?

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Bea

4 months ago

Totally agree, $1500 is the way to go!

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Arminda

4 months ago

Investment 1 has a higher net present value.

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Eun

5 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

5 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

5 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

5 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

5 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

5 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

5 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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