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

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?
D) Residual Income would increase and ROI would decrease.
A) Residual Income would decrease and ROI would increase.
B) Residual Income would decrease and ROI would decrease.
C) Residual Income would increase and ROI would increase.

CIMAPRO19-P02-1 Exam - 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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Bulah
8 months ago
Surprised that the project has a lower ROI than the current one!
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Leigha
8 months ago
Wait, how can ROI increase if the project ROI is lower?
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Kasandra
8 months ago
I disagree, I think ROI will actually increase!
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Chauncey
9 months ago
Definitely think Residual Income will decrease.
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Meaghan
9 months ago
ROI is lower than expected without the project.
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Mertie
9 months ago
I recall that accepting a project with a lower ROI than the current one could actually decrease overall performance measures, but I can't remember if it affects ROI directly.
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Eun
9 months ago
I'm a bit unsure, but I feel like if the project has a lower ROI than the investment centre's current ROI, it could lead to a decrease in residual income.
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Cherry
9 months ago
I think I practiced a similar question where the ROI was compared to the cost of capital. If the project ROI is lower than the existing ROI, it might not be a good move.
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Walton
10 months ago
I remember that if the ROI from the project is lower than the current ROI, it could negatively impact the residual income.
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Ashleigh
10 months ago
Hmm, I'm a little confused on whether the Joint Commission only requires clinical staff involvement. I'll need to review that part carefully.
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Twana
10 months ago
The way I see it, the consistent time and location helps establish a predictable routine for the Daily Scrum, which makes it easier for the team to attend and participate. Option B seems like the most relevant answer to me.
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Daisy
10 months ago
I think AlertDialog is more about showing important messages rather than being just a small interface at the bottom.
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Lindsey
1 year 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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Hildred
1 year ago
D) Residual Income would increase and ROI would decrease.
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Effie
1 year ago
C) Residual Income would increase and ROI would increase.
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Dyan
1 year ago
B) Residual Income would decrease and ROI would decrease.
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Mable
1 year ago
A) Residual Income would decrease and ROI would increase.
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Lashaunda
1 year ago
D) Residual Income would increase and ROI would decrease.
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Irma
1 year ago
C) Residual Income would increase and ROI would increase.
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Hollis
1 year ago
B) Residual Income would decrease and ROI would decrease.
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Maryann
1 year ago
A) Residual Income would decrease and ROI would increase.
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Rebecka
1 year 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
1 year 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
1 year ago
That makes sense. It's like a trade-off between the two performance measures.
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Dorothy
1 year ago
I think you're right. Residual Income would increase, but ROI would decrease.
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Merilyn
1 year 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
1 year 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 year ago
That makes sense, since the project's ROI is lower than the existing ROI.
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Nicolette
1 year ago
B) Residual Income would decrease and ROI would decrease.
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Dusti
1 year ago
But wouldn't the overall performance measure be affected negatively?
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Basilia
1 year ago
A) Residual Income would decrease and ROI would increase.
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Margarita
1 year ago
Yes, you're right. So the answer would be A) Residual Income would decrease and ROI would increase.
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Von
1 year ago
But wouldn't the ROI increase in that case?
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Margarita
1 year ago
I think if the project is accepted, the Residual Income would decrease.
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