CIMAPRO19-P01-1 Exam - Topic 5 Question 95 Discussion

Actual exam question for CIMA's CIMAPRO19-P01-1 exam

Question #: 95
Topic #: 5

A university is trying to decide whether or not to advertise a new post-graduate degree programme. The number of students starting the programme is dependent on economic conditions. If conditions are poor, it is expected that the programme will attract 40 students without advertising. There is a 60% chance that economic conditions will be poor. If economic conditions are good it is expected that the programme will attract only 20 students without advertising. There is a 40% chance that economic conditions will be good.

If the programme is advertised and economic conditions are poor, there is a 65% chance that the advertising will stimulate further demand and student numbers will increase to 50. If economic conditions are good, there is a 25% chance the advertising will stimulate further demand and numbers will increase to 25 students.

The profit expected, before deducting the cost of advertising, at different levels of student numbers are as follows:

The cost of advertising the programme will be $15,000.

Required:

Demonstrate, using a decision tree, whether the programme should be advertised.

AYes, the programme should be advertised as the profit will be $82000

BYes, the programme should be advertised as the profit will be $92000

CNo, the programme should not be advertised as there will be a loss $82000

DNo, the programme should not be advertised as there will be a loss $92000

Show Suggested Answer

Suggested Answer: A

References:

by Brandon at Aug 24, 2024, 11:20 PM

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Weldon

3 months ago

Not sure about those profit estimates, they seem too optimistic.

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Ligia

3 months ago

I agree, advertising seems worth it for the potential profit.

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Eden

3 months ago

Wait, how can they expect a profit with those student numbers?

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Claudio

4 months ago

I think it’s risky to rely on advertising with those odds.

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Sherly

4 months ago

Sounds like advertising could really boost those numbers!

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Shawn

4 months ago

I feel like the profit numbers are really close, but I can't remember how to set up the decision tree properly to compare them.

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Salome

4 months ago

If I recall correctly, we need to calculate the expected profit for both scenarios, with and without advertising, to make the right decision.

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Dacia

4 months ago

I remember that advertising can change the expected number of students, but I’m confused about how to factor in the probabilities for each economic condition.

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Irving

5 months ago

I think we did a similar question in class about decision trees, but I'm not sure how to calculate the expected profits here.

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Altha

5 months ago

This is a tricky one. There are a lot of moving parts to consider, and I'm not sure I fully understand the implications of the different scenarios. I'll need to re-read the question carefully and maybe even sketch out a decision tree to visualize the options.

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Blythe

5 months ago

Okay, I think I've got a handle on this. The key is to calculate the expected value of advertising versus not advertising, taking into account the probabilities and payoffs. I'm feeling confident I can work through this step-by-step.

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Mariann

5 months ago

This looks like a classic decision tree problem. I'll need to carefully map out the probabilities and payoffs to determine the best course of action.

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Loreta

5 months ago

Hmm, I'm a bit confused by all the different scenarios and probabilities. I'll have to take some time to really understand the information provided before I can decide on the best approach.

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Lettie

5 months ago

I feel pretty confident about this one. The question is asking for events that can create an inspection lot, so I'll select goods movement, order creation, and ATP check as my answers.

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Anastacia

5 months ago

This seems like a pretty straightforward question about how bandwidth is allocated in a flow-based WFQ solution. I think I have a good understanding of the concepts, so I'll carefully read through the options and select the best answer.

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Amie

1 year ago

I bet the university's marketing team is already working on some catchy slogans. 'Degree of Profit: Advertise Today!'

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Jodi

1 year ago

Let's hope the university's marketing team comes up with a winning campaign!

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Herschel

1 year ago

Yeah, the decision tree will show us if it's the right move financially.

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Jennifer

1 year ago

I think it's worth the investment, especially if it can increase profits.

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Benton

1 year ago

I wonder if the advertising will really make a difference in student numbers.

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Freeman

1 year ago

I'm just curious to know what the post-graduate degree is. Interpretive Dance, perhaps?

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Holley

1 year ago

Hmm, this is a tough one. The decision tree sounds like the way to go to really crunch the numbers and make an informed choice.

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Darell

1 year ago

That sounds like a good plan. Let's go ahead and advertise the programme then.

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Kiley

1 year ago

I think we should go for option B) Yes, the programme should be advertised as the profit will be $92000.

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Iola

1 year ago

I agree, using a decision tree will help us see the potential outcomes more clearly.

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Leonie

1 year ago

In that case, we might end up with a loss. Maybe we should reconsider our decision.

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Leota

1 year ago

Hold up, I'm not so sure. Option A mentions a profit of $82,000, which is still a decent amount. I might need to look at the numbers a bit closer.

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Johna

1 year ago

Let's take a closer look at the decision tree to make sure we make the right decision.

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Mila

1 year ago

That's true, we need to carefully analyze the numbers to make the best choice.

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Magdalene

1 year ago

I agree, but we should consider all the options before making a decision.

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Josefa

1 year ago

Option A seems like a good choice, $82,000 profit is not bad.

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Marguerita

1 year ago

But what if economic conditions turn out to be good and advertising doesn't bring in more students?

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Sharan

1 year ago

I think we should advertise it, the profit seems promising.

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Lizette

2 years ago

Should we advertise the new post-graduate degree programme?

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Rory

2 years ago

I'm leaning towards option B. The potential profit of $92,000 if the programme is advertised seems like a strong incentive.

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Benedict

1 year ago

In that case, maybe we should also take into account the probability of economic conditions being poor before making a final decision.

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Reiko

1 year ago

That's true. If conditions are poor, the profit might not be as high as expected. It's a risk to consider.

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Alishia

1 year ago

But what if the economic conditions turn out to be poor? Wouldn't that affect the decision to advertise?

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Lashandra

1 year ago

I agree, option B does seem like the best choice. The potential profit is quite high.

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