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IMANET Exam CMA Topic 1 Question 103 Discussion

Actual exam question for IMANET's CMA exam
Question #: 103
Topic #: 1
[All CMA Questions]

Barker, Inc. has no capital rationing constraint and is analyzing many independent investment alternatives. Barker should accept all investment proposals

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Suggested Answer: D

Initially, the company must invest $105,000 in the machine. Consisting of the invoice price of $90 00. the delivery costs of $6,000, and the installation costs of $9,000.


by Marge at Nov 16, 2024, 12:07 AM

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Jesse
3 months ago
Wait, Barker has no capital rationing constraint? Lucky them! I wish my company had that luxury. Option D all the way!
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Celestina
28 days ago
Debt financing availability is also important, so option A is something to consider.
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Domitila
29 days ago
I agree, as long as the investment has a positive net present value, Barker should accept it.
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Staci
1 months ago
Yes, Barker is in a good position without capital rationing. Option D makes sense.
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Huey
3 months ago
Hmm, I'm not sure. I think option A makes the most sense. Barker should accept all investment proposals if they have access to debt financing, right?
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Katlyn
1 months ago
User 3: Yes, that way Barker can maximize their potential returns on investments.
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Alana
1 months ago
User 2: I agree. It would make sense to take advantage of debt financing for investment opportunities.
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Angella
1 months ago
User 1: I think option A is a good choice. If debt financing is available, Barker should accept all investment proposals.
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Leonor
3 months ago
Haha, who needs a cost of debt when you can just borrow money from your rich uncle at 0% interest? Option C is clearly the way to go!
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Dana
1 months ago
User 4: As long as the investment has a positive net present value, it's a good choice for Barker.
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Rickie
1 months ago
User 3: Option C all the way, positive cash flows are key for Barker, Inc.
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Alberto
1 months ago
User 2: Definitely, as long as the investment provides returns greater than the cost of debt.
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Tamra
1 months ago
User 1: I agree, borrowing money at 0% interest is the best option.
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Jina
3 months ago
I disagree. I believe option B is the way to go. Barker should accept all investment proposals that have positive cash flows, regardless of their net present value.
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Wilburn
3 months ago
But what about the ones that provide returns greater than the before-tax cost of debt?
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Shaquana
3 months ago
I think option D is the correct answer. Barker should accept all investment proposals that have a positive net present value, as this will maximize the company's value.
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Deonna
2 months ago
True, but ultimately option D is the most comprehensive criteria to ensure the investments will be profitable for Barker, Inc.
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Annice
2 months ago
That's a good point. It's important for Barker to consider the cost of debt when making investment decisions.
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Donte
2 months ago
D) That have a positive net present value.
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Adrianna
2 months ago
But what about option C? Shouldn't Barker also consider investments that provide returns greater than the before-tax cost of debt?
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Lou
2 months ago
A) If debt financing is available for them.
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Mila
3 months ago
I agree, option D makes the most sense. It ensures that the investments will generate more value than they cost.
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Annett
3 months ago
I agree with you, as long as they have positive cash flows.
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Trinidad
3 months ago
I think Barker should accept all investment proposals.
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