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

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Maira

15 days ago

Wait, did you guys remember to account for the fact that the warehouse is made of bricks and mortar? That should definitely affect the IRR. *scratches head* Anyway, I'm sticking with B) 17.77%.

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Izetta

16 days ago

Hmm, I'm not so sure. Shouldn't the minimum acceptable IRR be lower than the discount rate? I'll go with D) 16.50%.

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2 months 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.

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Verdell

26 days ago

I'm not sure, but I think it's D) 16.50% because the project cost is quite high and might affect the minimum acceptable Internal Rate of Return.

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Rosina

1 months ago

I see your point, but I still think it's B) 17.77% because the discount rate is the main factor in this calculation.

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Hillary

1 months ago

I think it's actually C) 18.23%, because the present value of the tax shield is also a factor in determining the minimum acceptable Internal Rate of Return.

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Dominga

1 months ago

I agree with you, the answer is B) 17.77%

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Von

2 months ago

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

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