Deal of The Day! Hurry Up, Grab the Special Discount - Save 25% - Ends In 00:00:00 Coupon code: SAVE25
Welcome to Pass4Success

- Free Preparation Discussions

IMANET Exam CMA Topic 6 Question 105 Discussion

Actual exam question for IMANET's CMA exam
Question #: 105
Topic #: 6
[All CMA Questions]

A project requires an initial cash investment at its inception of $10,000, and no other cash outflows are necessary. Cash inflows from the project over its 3-year life are $6,000 at the end of the first year, $5,000 at the end of the second year, and $2,000 at the end of the third year. The future value interest factors for an amount of $1 at the firm's desired rate of return of 8% are

The present value interest factors for an amount of $1 for three periods are as follows:

The modified IRR (MIRR)for the project is closest to

Show Suggested Answer Hide Answer
Suggested Answer: D

Once an old piece of equipment has been disposed of, its histoncal cost no longer has an impact on a firms cash flows.


Contribute your Thoughts:

Mariann
2 months ago
I'm feeling confident about this one. It's like a math puzzle, and I love solving those!
upvoted 0 times
Sheridan
13 days ago
D) 12%
upvoted 0 times
...
Junita
16 days ago
C) 10%
upvoted 0 times
...
Quinn
18 days ago
B) 9%
upvoted 0 times
...
Jenifer
1 months ago
A) 8%
upvoted 0 times
...
...
Nicolette
2 months ago
Wait, what's the MIRR again? I should probably brush up on my financial formulas before the exam.
upvoted 0 times
Keva
20 days ago
D) 12%
upvoted 0 times
...
Victor
21 days ago
C) 10%
upvoted 0 times
...
Melodie
22 days ago
B) 9%
upvoted 0 times
...
Irving
2 months ago
A) 8%
upvoted 0 times
...
...
Therese
2 months ago
This question is perfect for the exam. It's challenging, but the information provided is clear and concise.
upvoted 0 times
Tasia
29 days ago
C) 10%
upvoted 0 times
...
Tracie
30 days ago
B) 9%
upvoted 0 times
...
Reuben
1 months ago
A) 8%
upvoted 0 times
...
...
Tawny
3 months ago
Hmm, the MIRR calculation seems tricky. I'd better double-check my work to make sure I get the right answer.
upvoted 0 times
Felicitas
1 months ago
I believe it's option C) 10%. What do you think?
upvoted 0 times
...
Elfriede
1 months ago
So, based on the cash flows and the required rate of return, we can calculate the MIRR to determine if the project is worth pursuing.
upvoted 0 times
...
Larae
2 months ago
So, which answer option do you think is closest to the MIRR for this project?
upvoted 0 times
...
Janae
2 months ago
Yes, that's correct. The MIRR takes into account the cost of capital and reinvestment rate. It provides a more accurate picture of the project's profitability.
upvoted 0 times
...
Cecil
2 months ago
That's correct. It's a more accurate measure of profitability compared to IRR.
upvoted 0 times
...
Alesia
2 months ago
I think the MIRR formula takes into account both the cost of the project and the reinvestment rate.
upvoted 0 times
...
Francis
2 months ago
I think the MIRR calculation involves adjusting for the cost of financing. It's not just a simple IRR calculation.
upvoted 0 times
...
...
Alesia
3 months ago
Okay, let's see... The given information includes the initial cash investment, cash inflows over the project's 3-year life, and the future value interest factors. I think I can work this out.
upvoted 0 times
...
Valentin
3 months ago
That's a good point, the timing of cash inflows does affect the MIRR calculation.
upvoted 0 times
...
Marnie
3 months ago
I disagree, I believe it's closer to 9% because of the cash inflows in the later years.
upvoted 0 times
...
Valentin
3 months ago
I think the MIRR for the project is closest to 10%.
upvoted 0 times
...

Save Cancel