CIMA Exam CIMAPRO19-P01-1 Topic 5 Question 86 Discussion

Actual exam question for CIMA's CIMAPRO19-P01-1 exam

Question #: 86
Topic #: 5

Explain how probability analysis could be used to assess the risk of the evaluated projects.

Select all the true statements.

AThe company can determine a range of possible outcomes for each of the cash flows in the project, for example, a high, low and medium estimate of each cash flow could be determined.

BThe net present value (NPV) of the project, if all high, low or medium estimates occurred, can be calculated along with the combined probabilities of their occurrence.

CThe probabilities can be combined to calculate the expected value of each cash flow element and of the project as a whole

DThe NPVs of a sample range of possible outcomes and the probability of each NPV can be calculated. If a small sample is taken the distribution of outcomes can be used to calculate the zero activities deviation of the NPVs and the probability of success of the projects.

Show Suggested Answer

Suggested Answer: A, B, C

References:

by Pilar at Apr 27, 2024, 07:44 PM

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6 months ago

This question makes me a bit nervous.

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