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IMANET Exam CMA Topic 1 Question 109 Discussion

Actual exam question for IMANET's CMA exam
Question #: 109
Topic #: 1
[All CMA Questions]

The discount rate ordinal' used in present value calculations is the

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Suggested Answer: B

If the 8% return exactly equals the present value of the future flows ., NPV is zero), then simply determine the present value of the future inflows. Thus, Hopkins Company's initial cash outlay is $19,090 [($2,500)(PVIFA at 8% for 10 periods) + ($5J00)(PVlF at 8% for 10 periods ($2,500)(6.710) + ($5,000)(.463)].


by Lina at Mar 23, 2025, 06:53 PM

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Kerry
5 days ago
The discount rate is definitely the minimum desired rate of return set by the firm. That's what we've been learning in our finance classes.
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Edwin
7 days ago
That makes sense, the firm's desired rate of return would be more relevant for present value calculations.
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Lacresha
13 days ago
I disagree, I believe it is the Minimum desired rate of return set by the firm.
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Edwin
14 days ago
I think the discount rate ordinal used in present value calculations is the Treasury bill rate.
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