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CIMA Exam CIMAPRO19-P02-1 Topic 7 Question 87 Discussion

Actual exam question for CIMA's CIMAPRO19-P02-1 exam
Question #: 87
Topic #: 7
[All CIMAPRO19-P02-1 Questions]

To which technique for dealing with risk and uncertainty do ALL of the following statements apply?

* It requires that only one factor is considered at a time.

* It identifies areas which are crucial to a project, which can then be monitored if the project is chosen.

* It does not provide an indication of the likelihood of any change in the factors.

* Following the calculation, it requires the exercising of judgement to decide whether to accept or reject a project.

Show Suggested Answer Hide Answer
Suggested Answer: A

by Kent at May 07, 2024, 11:49 PM

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Shawn
10 months ago
But given typical behavior in finance, A makes sense. IRR stays the same if not recalculating it.
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Eva
10 months ago
Interesting. I thought it could be E because they didn't set the new discount rate.
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Shaquana
10 months ago
Correct. IRR is independent of the discount rate, but NPV is sensitive to it.
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Deeanna
11 months ago
You mean, NPV will reduce and IRR will not change? Why?
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Shaquana
11 months ago
Yeah, it was tricky. I think it's option A.
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Eva
11 months ago
Did you see the question about correcting the underestimation of the discount rate?
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