Discuss IMANET CMA Exam Topic 3 Question 9

Calamity Cauliflower Corporation is considering undertaking a capital project. The company would have to commit $24000 of working capital in addition to an immediate outlay of $160 .000 for new equipment. The project is expected to generate $100 .000 of annual income for 10 years. At the end of that time, the new equipment, witch will be depreciated on a straight-line basis, is expected to have a salvage value of $ 10.000. The existing equipment that would be sold to make room for the project has a historical cost of $220,000 and accumulated depreciation of $208,000. It has an estimated remaining useful life of 2 years and the remaining book value is being depreciated on a straight-line basis. A scrap dealer has agreed to buy it for $8,000. The company's effective tax rate is 40%. Calamity Cauliflower's relevant after-tax annual cash inflow from the ongoing operations of the project is

A$100,000

B$60,000

C$40,000

D$0

Suggested Answer: B

The relevant after-tax annual cash inflow for the project consists of the gross cash inflow

,($10O.000) minus income tax expense ($100,000 x AO). or $60,000.

Get Premium CMA Questions as Interactive Web-Based Practice Test or PDF Real Exam Format Detailed Explanations Instant Access Get Your Practice Test

14 comments · newest first

Leonie 11 months ago

Isn't the salvage value going to affect the final cash flow too?

Juan 12 months ago

Wait, how can the cash inflow be that high with all these costs?

Cecilia 12 months ago

$60,000 sounds about right to me!

Tresa 12 months ago

I think the after-tax cash inflow is definitely not $100,000.

Denny 1 year ago

The initial outlay is $160,000 plus $24,000 in working capital.

Pearline 1 year ago

I believe the salvage value and the sale of the old equipment also play a role in the overall cash flow, but I'm a bit confused about how to incorporate those into the annual inflow.

Glynda 1 year ago

This question feels similar to one we practiced where we had to factor in depreciation and tax effects. I think the annual income needs to be adjusted for taxes.

Ryan 1 year ago

I remember we discussed how to calculate after-tax cash inflows, but I'm not sure if I got the tax impact right on the income.

Kristin 1 year ago

I think the relevant cash inflow should be less than the $100,000 due to taxes, but I can't recall the exact calculation for the depreciation.

Cyndy 1 year ago

The playbook part seems easy enough, but I'm a little worried about the firewall configuration. I'll need to double-check the firewalld module syntax to make sure I get that right.

Gwen 1 year ago

Based on the information provided, I believe the answer is to add the Marketing Cloud Security Administrator role. That should give the analyst the necessary permissions to import contact lists.

Ricarda 1 year ago

I'm not too familiar with WebLogic Server, so this question is a bit challenging for me. I'll need to read through the details carefully and try to apply my general knowledge of thread states to figure this out.

Mozell 1 year ago

The critical chain method sounds like it could be the right answer here. It's a schedule analysis technique that focuses on managing constraints and limited resources, if I remember correctly from the course material.

Mose 1 year ago

I think functional requirements are more about what the system should do, like specific features, while nonfunctional requirements cover how well those features perform, right?

IMANET CMA Exam - Topic 3 Question 9 Discussion