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CIMA Exam CIMAPRO19-P02-1 Topic 1 Question 72 Discussion

Actual exam question for CIMA's CIMAPRO19-P02-1 exam
Question #: 72
Topic #: 1
[All CIMAPRO19-P02-1 Questions]

An investment centre is appraising a potential project that is expected to yield a Return on Investment (ROI) of 12%.

Without the project the investment centre expects to earn an ROI of 14%. The cost of capital is 10%.

What would be the impact on the investment centre's performance measures if the project is accepted?

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Suggested Answer: D

by Eden at Jul 31, 2023, 01:32 AM

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Lindsey
2 months ago
Oooh, this one's a brain-teaser! I'm leaning towards B, but I'm also wondering if the investment center has a secret stash of magic beans that could make the numbers work out differently.
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Irma
5 hours ago
C) Residual Income would increase and ROI would increase.
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Hollis
1 months ago
B) Residual Income would decrease and ROI would decrease.
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Maryann
2 months ago
A) Residual Income would decrease and ROI would increase.
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Rebecka
2 months ago
This is a classic case of 'the numbers don't lie, but the accountants do.' I'm betting on B. Residual Income and ROI both go down. Unless, of course, the investment center is run by magicians.
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Twana
2 months ago
I'm going to go with D. If the project's ROI is lower, that means Residual Income will increase, but ROI will decrease. It's like getting a participation trophy, but with less actual performance.
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Hoa
2 months ago
That makes sense. It's like a trade-off between the two performance measures.
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Dorothy
2 months ago
I think you're right. Residual Income would increase, but ROI would decrease.
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Merilyn
2 months ago
Hmm, I think the answer is B. The project's ROI is lower than the current ROI, so that should decrease both Residual Income and ROI.
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Avery
2 months ago
This is a tricky one! The key is to understand how ROI and Residual Income are affected when the project's ROI is lower than the existing ROI.
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Louisa
1 months ago
That makes sense, since the project's ROI is lower than the existing ROI.
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Nicolette
1 months ago
B) Residual Income would decrease and ROI would decrease.
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Dusti
2 months ago
But wouldn't the overall performance measure be affected negatively?
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Basilia
2 months ago
A) Residual Income would decrease and ROI would increase.
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Margarita
2 months ago
Yes, you're right. So the answer would be A) Residual Income would decrease and ROI would increase.
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Von
3 months ago
But wouldn't the ROI increase in that case?
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Margarita
3 months ago
I think if the project is accepted, the Residual Income would decrease.
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