CIMA Exam CIMAPRO19-P03-1 Topic 5 Question 55 Discussion

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

Question #: 55
Topic #: 5

TRF is conducting a post completion audit on an investment in a pollution control machine that has reached the end of its five year useful life.

TRF could have been heavily fined if the machine had failed to keep pace with the output of emissions, measured in units. TRF's cost of capital is 10%. When the machine was purchased, there was a choice of three machines on the market:

TRF purchased the Big machine, but annual requirements only exceeded 600,000once, in year 3, when 720,000 units of emissions were emitted.

Calculate the amount that the post completion audit showsTRF overpaid for the ownership costs associated with this machine.

Give your answer to the nearest whole $ (in $'000s).

A$12582000

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Suggested Answer: B, C, E

by Josphine at Oct 06, 2023, 06:27 AM

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Tammara

2 months ago

Alright, let's do this! I've got my calculator, my spreadsheet, and my best problem-solving face on. This might take me a few minutes, but I'm confident I can figure out the right answer. After all, what's a little emissions control between friends?

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Rosio

16 days ago

Once we have those values, we can compare them to see how much TRF overpaid for the ownership costs.

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Ula

1 months ago

That's right. We also need to calculate the present value of the emissions output for each year.

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Bo

1 months ago

I think we need to calculate the present value of the ownership costs for the Big machine.

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Ivette

2 months ago

This looks like a classic time value of money problem. If I can just figure out the present value of the actual emissions requirements versus the cost of the machine, I should be able to determine if TRF overpaid. Of course, I'll need to double-check my calculations to make sure I don't mess this up. Wouldn't want to end up in the emissions control business myself!

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Rebbecca

16 days ago

Agreed, it's better to take the time to double-check and ensure everything is correct. Making a mistake could have serious consequences in this situation.

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Page

1 months ago

Definitely, accuracy is key when dealing with financial calculations. Double-checking your work is always a good idea to avoid any mistakes.

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Christiane

1 months ago

I think you're on the right track with calculating the present value of the emissions requirements. It's important to make sure all the numbers are accurate.

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Lorrine

2 months ago

Okay, let me see if I've got this right. TRF invested in a machine to control emissions, and they're trying to figure out if they overpaid for it. The key information seems to be the machine's useful life, the cost of capital, and the annual emissions requirements. I'll give it a shot, but I'm not confident in my answer.

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Hollis

2 months ago

I'm not sure about this one. The question seems to be asking about some kind of investment in a pollution control machine, but I'm not clear on the details. I'll need to re-read it a few times to make sure I understand what's being asked.

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