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CIMAPRA19-F03-1 Exam - Topic 6 Question 32 Discussion

A companyplansa four-year projectwhichwill be financed by either an operatinglease or a bank loan.Lease details:* Four year lease contract.* Annual leaserentalsof $45,000, paidin advance on the 1st day of the year.Other information:* Theinterest rate payable on thebank borrowing is 10%.* The capital cost of the project is $200,000 which would have to be paid at the beginning of the first year.* A salvage or residual value of $100,000 is estimated at the end of the project's life.* Purchased assets attract straight linetax depreciation allowances.* Corporate income taxis 20% andis payable at the end of the year following the year to which it relates.A lease-or-buy appraisal is shown below:Which THREE of the following items areerrorswithin the appraisal?
B) Tax relief on lease payments have not been lagged correctly and C) Using the 10% discount rate is incorrect and F) The salvage value has been included within the lease option
A) Lease payments are timed incorrectly
D) The project's operating cashflows should be included
E) The bank loan repayments should be included

CIMAPRA19-F03-1 Exam - Topic 6 Question 32 Discussion

Actual exam question for CIMA's CIMAPRA19-F03-1 exam
Question #: 32
Topic #: 6
[All CIMAPRA19-F03-1 Questions]

A companyplansa four-year projectwhichwill be financed by either an operatinglease or a bank loan.

Lease details:

* Four year lease contract.

* Annual leaserentalsof $45,000, paidin advance on the 1st day of the year.

Other information:

* Theinterest rate payable on thebank borrowing is 10%.

* The capital cost of the project is $200,000 which would have to be paid at the beginning of the first year.

* A salvage or residual value of $100,000 is estimated at the end of the project's life.

* Purchased assets attract straight linetax depreciation allowances.

* Corporate income taxis 20% andis payable at the end of the year following the year to which it relates.

A lease-or-buy appraisal is shown below:

Which THREE of the following items areerrorswithin the appraisal?

Show Suggested Answer Hide Answer
Suggested Answer: B, C, F

by Kattie at May 05, 2022, 09:18 AM

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Nichelle
10 months ago
Including the salvage value in the lease option seems off too.
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Lajuana
10 months ago
Tax relief on lease payments not lagged correctly is a clear error.
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Martin
11 months ago
Wait, are we sure about the 10% discount rate being wrong?
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Alberta
11 months ago
I agree, that’s a big mistake!
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Brittani
11 months ago
The lease payments are definitely timed incorrectly.
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Maurine
11 months ago
I'm a little confused by the different tax rate ranges. I'll need to make sure I understand how they apply before selecting an answer. Gotta be careful on these tricky tax questions.
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Sol
11 months ago
I've got this one. The key is that having each node set to local time would make it much harder to correlate and analyze the logs across the multinational organization. That's gotta be the right answer.
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Domingo
11 months ago
This question seems straightforward, I think I can handle it.
upvoted 0 times
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Tequila
11 months ago
I'm pretty sure the correct answers are IPsecVPN and ExpressRoute, since those are the two main site-to-site connectivity options supported by the Azure virtual network gateway.
upvoted 0 times
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Georgiann
11 months ago
Based on the description of the information source, I think the answer is OSINT. It sounds like the analyst used open-source intelligence gathering techniques.
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