CIMAPRO19-P02-1 Exam - Topic 5 Question 121 Discussion

Actual exam question for CIMA's CIMAPRO19-P02-1 exam

Question #: 121
Topic #: 5

[All CIMAPRO19-P02-1 Questions]

The money cost of capital is 12%. The expected rate of inflation is 4%. What is the real cost of capital?

Give your answer to 2 decimal places.

A7.69 %, 7.70 %

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Suggested Answer: A

by France at Jan 25, 2026, 07:10 PM

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Rima

19 days ago

No, it's 7.14%. Use the formula!

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Delisa

24 days ago

Wait, isn't it 8%?

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Rana

29 days ago

Exactly, so 12% - 4% gives us 8%.

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Jerry

1 month ago

But we need to adjust for inflation.

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Rima

1 month ago

Yeah, 12% - 4% equals 8%.

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Delisa

1 month ago

It's 7.14%, right?

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Rana

2 months ago

Real cost of capital?

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Jerry

2 months ago

I think it's tricky.

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Jestine

2 months ago

Yep, 7.14% is spot on!

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Elvis

4 months ago

Just to clarify, that's after adjusting for inflation, right?

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Alecia

4 months ago

Wait, are you sure about that calculation?

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Ivan

4 months ago

Totally agree, that makes sense!

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Xuan

4 months ago

The real cost of capital is 7.14%.

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Selma

4 months ago

7.69% - Piece of cake! Now, where's the nearest stock exchange?

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Cecil

4 months ago

7.69% - I'm so good at this, I should start my own hedge fund.

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Joye

5 months ago

7.69% - Nailed it! Time to celebrate with a fancy calculator.

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Pedro

5 months ago

7.69% - I'm feeling like a financial wizard right now!

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Kenneth

5 months ago

The real cost of capital is 7.69%. Easy peasy lemon squeezy!

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Darnell

5 months ago

7.69%

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Leota

5 months ago

I feel like I might be mixing up the terms. Is the real cost of capital just the nominal rate adjusted for inflation? I hope I remember it correctly!

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Leila

5 months ago

I practiced a similar question last week, but I can't recall if we need to adjust for compounding or just subtract the inflation directly.

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Milly

6 months ago

If I remember correctly, the formula is real cost = nominal cost - inflation rate. So, it should be 12% - 4%, right?

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Theola

6 months ago

I think we need to use the Fisher equation to find the real cost of capital, but I'm not entirely sure how to apply it here.

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Freeman

7 months ago

This is a classic real vs. nominal cost of capital question. Just subtract the inflation rate from the money cost and you've got your answer.

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Kallie

7 months ago

Wait, I'm a little confused. Do I need to do any special calculations here or just subtract the two numbers?

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Lenna

7 months ago

No problem, I've got this. The real cost of capital is just the money cost minus the inflation rate. Easy peasy.

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Helene

7 months ago

Hmm, I'm not sure how to approach this. Do I need to do some kind of calculation or formula?

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Ula

7 months ago

Okay, this looks straightforward. I just need to subtract the inflation rate from the money cost of capital to get the real cost.

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Kelvin

3 days ago

That's correct, simple math!

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Karma

8 days ago

Yeah, just 12% minus 4%.

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Romana

13 days ago

I think it's 8%.

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