CIMA Exam CIMAPRO19-P01-1 Topic 6 Question 93 Discussion

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

Question #: 93
Topic #: 6

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 Shawn at Jul 15, 2024, 05:42 AM

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Elina

4 months ago

Hah, I bet the exam writers had a field day coming up with all these probability options. Gotta love a good NPV calculation to keep us on our toes!

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Stefany

2 months ago

Probability analysis is definitely a key tool in project evaluation.

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Leonora

3 months ago

It's all about assessing the risk and making informed decisions.

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Brittney

3 months ago

I always get nervous when it comes to NPV calculations.

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Malinda

3 months ago

I know right, these options are no joke!

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Margot

4 months ago

Option D sounds like a really thorough way to analyze the risk. Calculating the distribution of possible NPVs and the probability of success is super useful.

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Carlee

3 months ago

Yes, calculating the distribution of possible NPVs can help in understanding the range of risks involved in the project.

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Yuette

3 months ago

Option D is definitely a detailed approach to assessing risk. It gives a clear picture of the potential outcomes.

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Lashunda

4 months ago

Definitely, it helps us assess the probability of success for the project.

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Melissa

4 months ago

Yes, it allows us to make more informed decisions about the project.

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Viva

4 months ago

I believe calculating the expected value of each cash flow element is crucial.

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Lashunda

5 months ago

I agree, it helps us understand the range of possible outcomes.

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Melissa

5 months ago

I think probability analysis is important for assessing project risk.

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Catarina

5 months ago

Definitely agree with option C. Determining the expected value of cash flows and the overall project is crucial for understanding the true risk profile.

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Mozell

5 months ago

I think option B is really helpful in assessing project risk. Calculating the NPVs for different scenarios and their probabilities gives a great overview of the potential outcomes.

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Noel

3 months ago

Definitely. Calculating the NPVs for each scenario can help in making more informed decisions.

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Jamal

3 months ago

I agree. It's important to consider different scenarios and their probabilities when assessing project risk.

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Lucina

4 months ago

Option B is indeed very helpful. It gives a clear picture of the potential outcomes.

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Brett

4 months ago

Calculating NPVs for various scenarios can help in making more informed decisions about the project's risks.

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Hester

4 months ago

I agree. It's important to consider different scenarios and their probabilities when assessing project risk.

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Emilio

4 months ago

I agree, calculating the NPVs for different scenarios and their probabilities is crucial for evaluating project risk.

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Louisa

4 months ago

Option B is definitely useful. It gives a clear picture of the project's potential outcomes.

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Edward

5 months ago

Option B is definitely a key factor in assessing project risk. It gives a clear picture of the potential outcomes.

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