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CIMAPRO19-P02-1 Exam - Topic 6 Question 61 Discussion

A positive net present value (NPV) has been calculated for a project to launch a new product. An additional calculation is required to identify the sensitivity of the NPV to changes in the forecast total sales volume.The present value of which of the following would be used in the calculation?
A) Contribution
B) Operating profit
C) Fixed overheads
D) Net profit

CIMAPRO19-P02-1 Exam - Topic 6 Question 61 Discussion

Actual exam question for CIMA's CIMAPRO19-P02-1 exam
Question #: 61
Topic #: 6
[All CIMAPRO19-P02-1 Questions]

A positive net present value (NPV) has been calculated for a project to launch a new product. An additional calculation is required to identify the sensitivity of the NPV to changes in the forecast total sales volume.

The present value of which of the following would be used in the calculation?

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Suggested Answer: A

by Jani at Nov 19, 2022, 03:50 AM

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Fernanda
10 months ago
Net profit is the final result, not what we need for this calculation!
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Buffy
10 months ago
Wait, are we sure contribution is the right choice? Seems too simple.
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Latrice
10 months ago
Fixed overheads shouldn't be in the NPV calculation, right?
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Dean
11 months ago
I think operating profit is more relevant here.
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Tawna
11 months ago
Definitely need to look at contribution for NPV sensitivity.
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Charlene
11 months ago
I feel like net profit might be too broad for this specific sensitivity analysis; contribution seems more direct, but I could be wrong.
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Trinidad
11 months ago
Fixed overheads seem like they wouldn't change with sales volume, so I doubt they are relevant for this calculation.
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Maryann
11 months ago
I remember practicing a similar question where we had to consider operating profit, but I can't recall if that's applicable here.
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Mary
11 months ago
I think we need to focus on the contribution margin for the sensitivity analysis, but I'm not entirely sure if that's the right approach.
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Leslee
11 months ago
This question seems straightforward, I think the answer is Continuity Of Operations Plan.
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Tamar
11 months ago
I think the "D" is for "Decide," but I'm not 100% sure. I'll make an educated guess on this one.
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Geraldo
11 months ago
Hmm, I'm a little unsure about the formatting part. I know I need to copy the text and paste it, but I'm not 100% sure how to get the left-justified and bold formatting right. I'll have to be careful with that step.
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