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

Actual exam question for CIMA's CIMAPRO19-P03-1 exam
Question #: 103
Topic #: 2
[All CIMAPRO19-P03-1 Questions]

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?

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Suggested Answer: A

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

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Carline
18 days ago
Totally agree, big investments can hurt short-term profits.
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Myra
23 days ago
They might be worried about cash flow issues.
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Frederic
1 month ago
I vaguely remember that a significant investment could lead to a temporary dip in profits, so maybe option C is the right choice after all.
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Hollis
2 months ago
I feel like the directors might be worried about future profits being affected, which could relate to option D, but I can't recall the details.
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Gertude
2 months ago
I think we practiced a similar question where the immediate costs affected the year's profit, so option C might be relevant here.
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Earleen
2 months ago
I remember discussing how a large investment can impact return on capital employed, but I'm not sure if it would reduce or increase it in this case.
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