CIMA Exam CIMAPRO19-P03-1 Topic 1 Question 82 Discussion

Actual exam question for CIMA's CIMAPRO19-P03-1 exam

Question #: 82
Topic #: 1

P has decided to invest in a new warehouse at a cost of $2,000,000. The discount rate of the project is18% and the present value of the tax shield is 26,000.

What is the minimum acceptableInternal Rate of Return of the project?

A18%

B17.77%

C18.23%

D16.50%

Show Suggested Answer

Suggested Answer: B, C, D

by Linwood at Oct 19, 2024, 04:38 AM

Limited Time Offer

25%

Off

Get Premium CIMAPRO19-P03-1 Questions as Interactive Web-Based Practice Test or PDF

Contribute your Thoughts:

Submit Cancel

Dominga

5 days ago

Hold on, if the present value of the tax shield is $26,000, that should be factored into the equation as well. I'm going with C) 18.23%.

upvoted 0 times

...

Lenna

5 days ago

I agree with Magnolia, the present value of the tax shield should be considered in determining the minimum acceptable Internal Rate of Return.

upvoted 0 times

...

Magnolia

8 days ago

I disagree, I believe it should be 17.77% because of the present value of the tax shield.

upvoted 0 times

...

Oliva

9 days ago

I think the answer is B) 17.77%. The discount rate is 18%, so the minimum acceptable Internal Rate of Return should be slightly lower than that.

upvoted 0 times

...

Von

12 days ago

I think the minimum acceptable Internal Rate of Return should be 18%.

upvoted 0 times

...