Amazon
Avaya
Checkpoint
Cisco®
CompTIA
CrowdStrike
EC-Council
EXIN
Fortinet
Google
ISC
ISC2
ITIL®
Juniper
Microsoft
Okta
Palo Alto Networks
Salesforce
All Vendors
  1. Home
  2. Financial
  3. CMA

Financial CMA Exam (page: 19)
Financial Certified Management Accountant
Updated on: 25-Dec-2025

Viewing Page 19 of 270
CMA PDF 1336 Questions

Details: Ranking Investment Projects 19

Assume that the interest rate is greater than zero. Which of the following cash-inflow streams should you prefer?

  1. Option
  2. Option
  3. Option
  4. Option

Answer(s): A

Explanation:

The concept of present value gives greater value to inflows received earlier in the stream. Thus, the declining inflows would be superior to increasing inflows, or even inflows.




Details: Ranking Investment Projects 19

Wilkinson, Inc., which has a cost of capital of 12%, invested in a project with an internal rate of return (IRR) of 14%. The project is expected to have a useful life of four years, and it will produce net cash inflows as follows:


The initial cost of this project amounted to

  1. $7,483
  2. $9,647
  3. $11,000
  4. $12,540

Answer(s): A

Explanation:

The internal rate of return (IRP) of a capital project is the rate at which the net present value (NPV) of its future cash flows equals zero. To find this project's NPV, therefore, it is necessary to discount the cash flows at the appropriate rate (14%) as follows:




Details: Ranking Investment Projects 19

Gibber Corporation has an opportunity' to sell newly developed product in the United States for a period of five years. The product license would be purchased from New Group Company. Gibber would be responsible for all distribution and product promotion costs. New Group has the option to renew the agreement, with modifications, at the end of the initial five-year term. Gibber has developed the following estimated revenues and costs that would be associated with the new product:


The working capital required to support the new product would be released for investment elsewhere if the product licensing agreement is not renewed. Using the net present value method of analysis and ignoring the effects of income taxes, the net present value of this product agreement, assuming Gibber has a 20% cost of capital, would be

  1. $7,720
  2. $(64,064)
  3. $(72,680)
  4. $(127,320)

Answer(s): A

Explanation:

The net present value of a capital project is derived by calculating three amounts and discounting them at the appropriate interest rate: the net initial investment (for which the rate is always 0%), the annual cash inflows, and the termination cash inflows. The net initial investment itself consists of three components: the purchase of new equipment, the increase in working capital, and the proceeds from the disposal of any old equipment. For this project, this amount is $320000 ($120,000 + 200,000 + $0). Since this amount is paid out today, its present value is $320,000, i.e., no discounting is performed. The second element of the project as a whole is the annual cash inflows. This has two components: the cash inflows from operations and the depreciation tax shield arising from the purchase of new equipment. Since the effects of income taxes are not relevant to this problem, only the first of these components requires calculation. The annual net operating revenue is $80,000 ($400,000--$250,000--$70,000). Discounted as an ordinary annuilyfor5 years at 20%, its present value is $239,280 ($80,000 x 2.991). The third and final element is the cash flows upon termination of the project, consisting of the proceeds from the disposal of the equipment involved in the project (again, the effects of income taxes are ignored for this problem) and the recovery of working capital. For this project, this amount is $220,000 ($20,000 + $200,000). Discounted as a single amount to be received in 5 years at 20%, its present value is $88,440 ($220,000 x 0.402). Gibber's total net present value for this capital project can therefore be calculated as follows:




Details: Ranking Investment Projects 19

Benet, Inc. uses the net present value method to evaluate capital projects. Bonnet's required rate of return is 10%. Benet is considering two mutually exclusive projects for its manufacturing business. Both projects require an initial outlay of $120,000 and are expected to have a useful life of four years. The projected after-tax cash flows associated with these projects are as follows:


Assuming adequate funds are available, which of the following project options would you recommend that Bennet's management undertake?

  1. Project X only.
  2. Project Y only.
  3. Projects X and Y.
  4. Neither project.

Answer(s): A

Explanation:

The net present value of Project X can be determined using the present value factor for an annually (3.170) because the cash flows are even over the life of the project. An ordinarqannuilyof$401000 discounted at 10% for the next four years has a present value of $1 26800. The cash inflows of Project Y are uneven and so must be discounted with individual factors for each of the four years as follows:


Since the projects are mutually exclusive, the one with the higher net present value is the correct choice.




Details: Ranking Investment Projects 19

50. Brown and Company uses the internal rate of return (IRR) method to evaluate capital projects. Brown is considering four independent projects with the following lRRs:


Brown's cost of capital is 13%. Which one of the following project options should Brown accept based on IRR?

  1. Projects I and II only.
  2. Projects Ill and IV only.
  3. Project IV only.
  4. Projects I, II, Ill and IV.

Answer(s): B

Explanation:

When sufficient funds are available, any capital project whose internal rate of return (IRR) exceeds the company cost of capital should be accepted.



Viewing Page 19 of 270



Share your comments for Financial CMA exam with other users:

BigMouthDog 1/22/2022 8:17:00 PM

hi team just want to know if there is any update version of the exam 350-401
AUSTRALIA


francesco 10/30/2023 11:08:00 AM

helpful on 2017 scrum guide
EUROPEAN UNION


Amitabha Roy 10/5/2023 3:16:00 AM

planning to attempt for the exam.
Anonymous


Prem Yadav 7/29/2023 6:20:00 AM

pleaseee upload
INDIA


Ahmed Hashi 7/6/2023 5:40:00 PM

thanks ly so i have information cia
EUROPEAN UNION


mansi 5/31/2023 7:58:00 AM

hello team, i need sap qm dumps for practice
INDIA


Jamil aljamil 12/4/2023 4:47:00 AM

it’s good but not senatios based
UNITED KINGDOM


Cath 10/10/2023 10:19:00 AM

q.119 - the correct answer is b - they are not captured in an update set as theyre data.
VIET NAM


P 1/6/2024 11:22:00 AM

good matter
Anonymous


surya 7/30/2023 2:02:00 PM

please upload c_sacp_2308
CANADA


Sasuke 7/11/2023 10:30:00 PM

please upload the dump. thanks very much !!
Anonymous


V 7/4/2023 8:57:00 AM

good questions
UNITED STATES


TTB 8/22/2023 5:30:00 AM

hi, could you please update the latest dump version
Anonymous


T 7/28/2023 9:06:00 PM

this question is keep repeat : you are developing a sales application that will contain several azure cloud services and handle different components of a transaction. different cloud services will process customer orders, billing, payment, inventory, and shipping. you need to recommend a solution to enable the cloud services to asynchronously communicate transaction information by using xml messages. what should you include in the recommendation?
NEW ZEALAND


Gurgaon 9/28/2023 4:35:00 AM

great questions
UNITED STATES


wasif 10/11/2023 2:22:00 AM

its realy good
UNITED ARAB EMIRATES


Shubhra Rathi 8/26/2023 1:12:00 PM

oracle 1z0-1059-22 dumps
Anonymous


Leo 7/29/2023 8:48:00 AM

please share me the pdf..
INDIA


AbedRabbou Alaqabna 12/18/2023 3:10:00 AM

q50: which two functions can be used by an end user when pivoting an interactive report? the correct answer is a, c because we do not have rank in the function pivoting you can check in the apex app
GREECE


Rohan Limaye 12/30/2023 8:52:00 AM

best to practice
Anonymous


Aparajeeta 10/13/2023 2:42:00 PM

so far it is good
Anonymous


Vgf 7/20/2023 3:59:00 PM

please provide me the dump
Anonymous


Deno 10/25/2023 1:14:00 AM

i failed the cisa exam today. but i have found all the questions that were on the exam to be on this site.
Anonymous


CiscoStudent 11/15/2023 5:29:00 AM

in question 272 the right answer states that an autonomous acces point is "configured and managed by the wlc" but this is not what i have learned in my ccna course. is this a mistake? i understand that lightweight aps are managed by wlc while autonomous work as standalones on the wlan.
Anonymous


pankaj 9/28/2023 4:36:00 AM

it was helpful
Anonymous


User123 10/8/2023 9:59:00 AM

good question
UNITED STATES


vinay 9/4/2023 10:23:00 AM

really nice
Anonymous


Usman 8/28/2023 10:07:00 AM

please i need dumps for isc2 cybersecuity
Anonymous


Q44 7/30/2023 11:50:00 AM

ans is coldline i think
UNITED STATES


Anuj 12/21/2023 1:30:00 PM

very helpful
Anonymous


Giri 9/13/2023 10:31:00 PM

can you please provide dumps so that it helps me more
UNITED STATES


Aaron 2/8/2023 12:10:00 AM

thank you for providing me with the updated question and answers. this version has all the questions from the exam. i just saw them in my exam this morning. i passed my exam today.
SOUTH AFRICA


Sarwar 12/21/2023 4:54:00 PM

how i can see exam questions?
CANADA


Chengchaone 9/11/2023 10:22:00 AM

can you please upload please?
Anonymous