IMANET Exam CMA Topic 2 Question 108 Discussion

Actual exam question for IMANET's CMA exam

Question #: 108
Topic #: 2

[All CMA Questions]

The data available for the current year are given below.

using the information presented above, the contribution by Division I was?

A$190000

B$260,000

CS310.000

D$380 000

Show Suggested Answer

Suggested Answer: A

The NPV of both machines must be calculated and compared to determine which will yield a better return of cash flows. Machine A is calculated as one lump sum payable in 4 years minus the initial investment cost.

The NPV of Machine B is calculated as the present value of an ordinary annuity of

$13,000 for 4 years, minus the initial investment cost.

By comparing the NPV of both machines, Cliff would choose Machine A because NPV of A > NPV of B by $1,044.

by Nu at Mar 05, 2025, 04:19 AM

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Twanna

1 days ago

I calculated it and I am confident that the contribution was $310,000.

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Elvera

3 days ago

I disagree, I believe the contribution was $190,000.

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Kathrine

4 days ago

I think the contribution by Division I was $260,000.

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Lynelle

6 days ago

I'm pretty sure it's B) $260,000. The data looks straightforward enough.

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