CIMAPRA17-BA1-1 Exam - Topic 1 Question 91 Discussion

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

Question #: 91
Topic #: 1

A business is contemplating investing in a new project with a lifespan of three years and a capital cost of $100,000. The expected net cash flows from the project are as follows:

Year 1 $35,000

Year 2 $50,000

Year 3 $40,000

The cost of capital to the business is 10%

The net present value of the project is: $

A3155, 3150, 3159, 3157, 3153, 3152, 3158, 3160, 3156, 3154, 3151

B3155, 3150, 3159, 3158, 3153, 3152, 3158, 3160, 3156, 3154, 3151

C3155, 3150, 3159, 3157, 3153, 3150, 3158, 3160, 3156, 3154, 3151

D3153, 3150, 3159, 3157, 3153, 3152, 3158, 3160, 3156, 3154, 3151

Show Suggested Answer

Suggested Answer: B

by Elsa at Jul 03, 2024, 03:49 AM

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Hollis

4 months ago

I’m leaning towards option B for the NPV.

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Pamella

5 months ago

10% cost of capital is pretty standard, right?

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Isreal

5 months ago

Wait, are we sure about those cash flow estimates?

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Daniela

5 months ago

I think the NPV will be positive, definitely worth it.

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Nieves

5 months ago

The cash flows look solid for a 3-year project!

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Kris

6 months ago

I think the answer might be around 3155, but I’m not completely confident. I wish I had reviewed the NPV calculations more thoroughly.

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Tyisha

6 months ago

I’m a bit confused about how to apply the cost of capital here. Did we use it directly in the calculations or was it just for comparison?

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Jennifer

6 months ago

This question seems similar to one we practiced last week. I think the cash flows need to be discounted at 10% to find the NPV.

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Candida

6 months ago

I remember we calculated NPV in class, but I’m not sure if I got the formula right for this one.

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This seems pretty straightforward. I'll just plug the numbers into the NPV formula and see what I get. As long as I don't make any silly mistakes in the calculations, I should be able to arrive at the correct answer.

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Asha

6 months ago

Okay, I've got this. First, I'll calculate the present value of each cash flow using the discount rate of 10%. Then I'll add up the present values and subtract the initial investment to get the NPV. Should be straightforward if I work through it step-by-step.

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Celestina

6 months ago

Hmm, I'm a bit unsure about how to approach this. I know NPV has something to do with the time value of money, but I'm not confident in my ability to do the calculations correctly. Maybe I should review my notes on this topic before attempting the problem.

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Kindra

6 months ago

This looks like a standard net present value (NPV) calculation problem. I'll need to discount the future cash flows back to the present using the given 10% cost of capital.

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Malcom

6 months ago

I'm pretty confident I know the answer to this. If the team member hierarchy type is changed, the existing targets would turn to draft status, so option C is the correct answer.

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Karol

6 months ago

The T Server and Media Server don't seem to be the right answers here. I'm leaning towards the SIP Server and Network SIP Server, but I'll review my notes to make sure I'm not missing anything.

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