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CIMA Exam CIMAPRA19-P03-1 Topic 4 Question 65 Discussion

Actual exam question for CIMA's CIMAPRA19-P03-1 exam
Question #: 65
Topic #: 4
[All CIMAPRA19-P03-1 Questions]

Having carried out a full capital appraisal for a construction project, HCompanyhasapproved the project with initial outflows of $6,000,000 anda net present value of $1,200,000.

The implementation phase has been commenced with 25% of the costs already committed.However whenthe ground was opened, an underground waterway was revealedwhich will need to be diverted if the project is to proceed. Work to carry out this diversion has been estimated at $1,300,000.

Which of the following factors will define whether the project should go ahead or not?

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Suggested Answer: A, B, C

by Edison at Feb 06, 2025, 08:21 AM

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Ezekiel
20 hours ago
This is a tricky one. The project was initially approved, but now there's a major unexpected cost. Shareholder confidence is definitely a factor to consider.
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Shenika
2 days ago
Hmm, the project has already incurred significant costs, but the NPV is now negative. I wonder if the additional cost of diverting the waterway will outweigh the expected benefits.
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Antonio
3 days ago
True, that could impact the project's NPV. We need to consider all factors before making a decision.
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Felicitas
6 days ago
But what about the additional cost of diverting the underground waterway?
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Antonio
7 days ago
I think the project should still go ahead.
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