CIMAPRO19-P02-1 Exam - Topic 7 Question 125 Discussion

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

Question #: 125
Topic #: 7

You have just assessed an investment proposal, involving an immediate cash outflow followed by a series of cash inflows over the next 7years, by deducing the NPV and the IRR. You have now discovered that you have

underestimated the discount rate.

Correcting the underestimation will have the following effect, relative to your original deductions:

ANPV will reduce, IRR will not change

BNPV and IRR will not change

CNPV will increase, IRR will reduce

DNPV and IRR will both increase

ENot enough information given for an answer

Show Suggested Answer

Suggested Answer: A

by Marti at May 07, 2026, 07:46 AM

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Linwood

17 days ago

I feel like the IRR is more about the rate of return rather than the discount rate itself, so I'm a bit confused about how it would change.

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Donte

22 days ago

I think I practiced a similar question where a higher discount rate led to a lower NPV, so maybe A is correct?

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Kandis

27 days ago

I remember that increasing the discount rate generally decreases the NPV, but I'm not sure how it affects the IRR.

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