IMANET CMA Exam - Topic 3 Question 9 Discussion

Actual exam question for IMANET's CMA exam

Question #: 9
Topic #: 3

[All CMA Questions]

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

Show Suggested Answer

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.

by Audry at May 09, 2022, 03:19 AM

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Leonie

5 months ago

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

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Juan

5 months ago

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

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Cecilia

5 months ago

$60,000 sounds about right to me!

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Tresa

5 months ago

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

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Denny

5 months ago

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

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Pearline

5 months 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.

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Glynda

5 months 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.

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Ryan

6 months 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.

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Kristin

6 months 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.

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Cyndy

6 months 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.

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Gwen

6 months 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.

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Ricarda

6 months 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.

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Mozell

6 months 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.

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Mose

6 months 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?

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