CIMAPRO19-P03-1 Exam - Topic 5 Question 3 Discussion

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

Question #: 3
Topic #: 5

A UK based company is considering an investment of GB1,000,000 in a project in the US

AIt is anticipated that the following cash flows will arise from this project.
The cash flows will be either US$400,000 with a probability of 40% or US$700,000 with a probability of 60% for each of the next three years; remitted to the UK at the end of each year.
Currendy GB1.00 is worth US$1.30.
The expected inflation rates in the two countries over the next four years are 2% in the UK and 4% in the US.
Applying the Purchasing Power Parity Theory, which of the following represents the expected net present value of the project in GP (to the nearest whole pound)?

AGB287.639

BGB391,640

CGB(111,973)

DGB554,047

Show Suggested Answer

Suggested Answer: A, A

by Jess at May 09, 2022, 05:45 AM

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Aleisha

4 months ago

I’m leaning towards option D, it feels more realistic!

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Patrick

4 months ago

GBP287,639 seems way too low for this investment.

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Salley

4 months ago

Wait, how can we be sure about those probabilities?

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Kimberlie

4 months ago

I think option B looks promising!

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Jaleesa

5 months ago

The cash flows are US$400k and US$700k, right?

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Socorro

5 months ago

This looks like a pretty straightforward load balancing question. I think the key is to find the two actions that would set up the 4:1 ratio between the links.

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Jospeh

5 months ago

This question seems straightforward. I think the answer is B - Situations having more than one valuation dates. The question mentions the "alternative valuation date" as an example, which implies there are multiple dates to consider.

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Isabella

5 months ago

Alright, I think I've got it. The routing table shows that the network prefix 10.0.2.0/24 is associated with the Ethernet 0/0/2 interface. Since the destination IP 10.0.2.2 falls within that network prefix, the packet should be sent from the Ethernet 0/0/2 interface.

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