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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Milly

5 days 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

10 days 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

15 days 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

20 days 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

26 days 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

1 month 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

1 month 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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