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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.

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Suggested Answer: A

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

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Elvis
15 days ago
Just to clarify, that's after adjusting for inflation, right?
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Alecia
20 days ago
Wait, are you sure about that calculation?
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Ivan
25 days ago
Totally agree, that makes sense!
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Xuan
1 month ago
The real cost of capital is 7.14%.
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Selma
1 month ago
7.69% - Piece of cake! Now, where's the nearest stock exchange?
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Cecil
1 month ago
7.69% - I'm so good at this, I should start my own hedge fund.
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Joye
2 months ago
7.69% - Nailed it! Time to celebrate with a fancy calculator.
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Pedro
2 months ago
7.69% - I'm feeling like a financial wizard right now!
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Kenneth
2 months ago
The real cost of capital is 7.69%. Easy peasy lemon squeezy!
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Darnell
2 months ago
7.69%
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Leota
2 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
2 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
3 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
3 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
4 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
4 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
4 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
4 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
4 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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