CIMAPRO19-P01-1 Exam - Topic 7 Question 68 Discussion

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

Question #: 68
Topic #: 7

Explain how probability analysis could be used to assess the risk of the evaluated projects.

Select all the true statements.

AThe company can determine a range of possible outcomes for each of the cash flows in the project, for example, a high, low and medium estimate of each cash flow could be determined.

BThe net present value (NPV) of the project, if all high, low or medium estimates occurred, can be calculated along with the combined probabilities of their occurrence.

CThe probabilities can be combined to calculate the expected value of each cash flow element and of the project as a whole

DThe NPVs of a sample range of possible outcomes and the probability of each NPV can be calculated. If a small sample is taken the distribution of outcomes can be used to calculate the zero activities deviation of the NPVs and the probability of success of the projects.

Show Suggested Answer

Suggested Answer: A, B, C

References:

by Laurel at Mar 28, 2023, 06:44 PM

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Sage

4 months ago

Wait, can you really calculate probabilities for NPV like that? Sounds wild!

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Carla

4 months ago

C is spot on, expected value is essential for assessing risk.

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Angella

4 months ago

I’m not sure about D, seems a bit complicated for a small sample.

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Dana

4 months ago

Totally agree, NPV calculations are key for project evaluation.

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Kimberely

4 months ago

A range of outcomes is super helpful for cash flow estimates!

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Kaitlyn

5 months ago

I feel like option D is a bit complex. I remember something about using distributions for NPVs, but the zero activities deviation part is confusing.

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Nickolas

5 months ago

Option C seems right to me. I recall we practiced calculating expected values for cash flows, so that should apply here too.

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Kate

5 months ago

I'm a bit unsure about option B. I think we can calculate NPV with different estimates, but combining probabilities sounds tricky.

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Noe

5 months ago

I remember we discussed how determining a range of cash flow outcomes is crucial for understanding project risks. So, I think option A makes sense.

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Luisa

5 months ago

Okay, I think I've got it. If the information is confirming users' earlier expectations, then that must be the "confirmatory value" characteristic. That makes the most sense to me.

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Chanel

5 months ago

The key here is to focus on reducing vulnerabilities. That seems like the most relevant and important objective for software security testing.

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