CIMAPRO19-P03-1 Exam - Topic 2 Question 103 Discussion

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

Question #: 103
Topic #: 2

The board of OKN is considering an investment opportunity that will require the company to borrow a large amount in month 10 of the current financial year and to invest it immediately in property, plant and equipment. This investment has a positive net present value that justifies the risk, but the directors are reluctant to invest in the project.

Why might the directors be reluctant?

AThe return on capital employed for the year will be reduced if the investment is made.

BThe return on capital employed for the year will be increased if the investment is made.

CThe year's profit will be depressed by the amount of the investment.

DFuture profits will be depressed.

Show Suggested Answer

Suggested Answer: A

by Latanya at Mar 30, 2026, 10:16 PM

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