Deal of The Day! Hurry Up, Grab the Special Discount - Save 25% - Ends In 00:00:00 Coupon code: SAVE25
Welcome to Pass4Success

- Free Preparation Discussions
Mail Us support@pass4success.com
Location US
Mob_nav_barsMENU

CIMAPRO19-P02-1 Exam - Topic 8 Question 91 Discussion

Actual exam question for CIMA's CIMAPRO19-P02-1 exam
Question #: 91
Topic #: 8
[All CIMAPRO19-P02-1 Questions]

A company is investing $200,000 in a project which will generate a cash flow of $60,000 each year for five years starting immediately. The company's cost of capital is 7%.

The net present value of the investment to the nearest $100 is $

Show Suggested Answer Hide Answer
Suggested Answer: A, C, D

by Leatha at Jun 29, 2024, 07:19 AM

Limited Time Offer

25%

Off

Get Premium CIMAPRO19-P02-1 Questions as Interactive Web-Based Practice Test or PDF

Contribute your Thoughts:

0/2000 characters
Submit Cancel
Moon
4 months ago
$63,200 seems high, double-check those numbers!
upvoted 0 times
...
Julianna
5 months ago
Totally agree, looks like a good investment!
upvoted 0 times
...
Phyliss
5 months ago
Wait, are we sure about that 7% cost of capital?
upvoted 0 times
...
Leonor
5 months ago
That's a solid cash flow for 5 years!
upvoted 0 times
...
Jeanice
5 months ago
NPV calculation is key here!
upvoted 0 times
...
Erick
6 months ago
I think the cash flows start immediately, which might mean we treat the first cash flow differently. I hope I remember the formulas correctly!
upvoted 0 times
...
Jerry
6 months ago
I feel like I might be mixing up the cost of capital with the discount rate. Is it the same thing in this case?
upvoted 0 times
...
Helga
6 months ago
I remember doing a similar question where we had to find the NPV, but I’m not sure if I should use the cash flow formula directly or discount each cash flow separately.
upvoted 0 times
...
Gaynell
6 months ago
I think we need to calculate the present value of those cash flows and then subtract the initial investment.
upvoted 0 times
...
Tu
6 months ago
This seems pretty straightforward. I'll just plug the numbers into the present value formula and do the calculation. As long as I don't make any silly mistakes, I should be able to get the right answer.
upvoted 0 times
...
Andrew
6 months ago
Hmm, I'm a bit unsure about how to approach this. I know it involves present value calculations, but I'm not sure if I should be using the formula or a financial calculator. I'll have to review my notes on this topic.
upvoted 0 times
...
Ceola
6 months ago
This looks like a straightforward time value of money problem. I'll start by calculating the present value of the annual cash flows using the given discount rate of 7%.
upvoted 0 times
...
Lillian
6 months ago
Okay, I think I've got this. I'll need to find the present value of the $60,000 annual cash flows over the 5-year period, and then subtract the initial investment of $200,000 to get the net present value. Shouldn't be too difficult.
upvoted 0 times
...
Benton
6 months ago
I remember learning about Lewin's model, but I'm drawing a blank on the specifics of the move stage. I'll have to think this through carefully.
upvoted 0 times
...
Rolland
6 months ago
Okay, let's see. The key information I need to determine is the cost basis of the 2,000 shares surrendered. Once I have that, I can calculate the gain or loss and select the correct answer.
upvoted 0 times
...
Dana
6 months ago
I think we need the server address, but I'm not sure if it's an APOP3 address or something else.
upvoted 0 times
...
Anika
11 months ago
I wonder if the company is investing in a time machine to get those cash flows. That would be a real money-maker!
upvoted 0 times
Shenika
9 months ago
Definitely, with a net present value like that, it seems like a smart investment.
upvoted 0 times
...
Winifred
10 months ago
I agree, $63,200 sounds about right. The company should definitely go for it!
upvoted 0 times
...
Clare
10 months ago
I think the net present value would be $63,200. What about you?
upvoted 0 times
...
Chanel
10 months ago
That would be amazing if they had a time machine! But let's focus on the numbers. What do you think the net present value is?
upvoted 0 times
...
...
Delsie
12 months ago
Wait, did they say 'to the nearest $100'? Guess I better double-check my work.
upvoted 0 times
Madelyn
10 months ago
Yes, it should be $63,200 since we need to round to the nearest $100.
upvoted 0 times
...
Ngoc
10 months ago
I think the correct answer is $63,200.
upvoted 0 times
...
Lyla
10 months ago
I also calculated $63,200 as the net present value.
upvoted 0 times
...
Glenna
11 months ago
I got $63,200 as the net present value.
upvoted 0 times
...
...
Antonio
12 months ago
Alright, let's do this! I can already taste that sweet, sweet certification.
upvoted 0 times
...
Cherelle
12 months ago
Hmm, 7% cost of capital? That's a bit higher than I was expecting. I wonder if that's going to impact the final result.
upvoted 0 times
...
Brendan
12 months ago
This seems like a straightforward time value of money problem. I'll plug the numbers into the NPV formula and see what I get.
upvoted 0 times
Raelene
11 months ago
I got an NPV of $63,200. Looks like option A is the correct answer.
upvoted 0 times
...
Alline
11 months ago
Let's calculate the NPV using the formula.
upvoted 0 times
...
...
Leslee
12 months ago
I'm not sure about the answer. Can someone explain how the net present value is calculated in this case?
upvoted 0 times
...
Lavonna
1 year ago
I agree with Bok. The net present value calculation is based on the discounted cash flows using the cost of capital.
upvoted 0 times
...
Bok
1 year ago
I think the answer is A) 63200.
upvoted 0 times
...

Save Cancel