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CIMAPRO19-P02-1 Exam - Topic 7 Question 13 Discussion

The net present value of the cost of operating a machine for the next 4 years is 6,340. The discount rate used is 10%.What is the equivalent annual cost and the present value of the cost in perpetuity of operating this machine?Use discount factors to 3 decimal places.
C) Equivalent annual cost = 2,000 Present value of cost in perpetuity = 20,000
A) Equivalent annual cost = 92,825 Present value of cost in perpetuity = 9,283
B) Equivalent annual cost = 9,283 Present value of cost in perpetuity = 92,825
D) Equivalent annual cost = 20,000 Present value of cost in perpetuity = 2,000

CIMAPRO19-P02-1 Exam - Topic 7 Question 13 Discussion

Actual exam question for CIMA's CIMAPRO19-P02-1 exam
Question #: 13
Topic #: 7
[All CIMAPRO19-P02-1 Questions]

The net present value of the cost of operating a machine for the next 4 years is 6,340. The discount rate used is 10%.

What is the equivalent annual cost and the present value of the cost in perpetuity of operating this machine?

Use discount factors to 3 decimal places.

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Suggested Answer: C

by Ruthann at May 05, 2022, 05:50 PM

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Marsha
9 months ago
Is it really that straightforward? I’m not so sure.
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Rebbeca
9 months ago
Totally agree, B makes the most sense here!
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Herman
9 months ago
Wait, how can the present value be higher than the NPV? Sounds off.
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Luann
9 months ago
I think B is the correct answer!
upvoted 0 times
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Felton
9 months ago
Equivalent annual cost should be lower than the total NPV, right?
upvoted 0 times
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Anthony
10 months ago
The options mention a few different Avaya products, so I'll need to review my notes on their capabilities to determine the right one for outbound campaign management.
upvoted 0 times
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Tom
10 months ago
Alright, I've got a few ideas. I think the key is understanding whether the database instance needs to be up or not.
upvoted 0 times
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Trina
10 months ago
This one seems pretty straightforward. I'm pretty confident the right answer is B, the right to vote on important company matters.
upvoted 0 times
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