Financial Certified Management Accountant CMA Exam Questions in PDF

Free Financial CMA Dumps Questions (page: 48)


Details: Ranking Investment Projects 19

The profitability index approach to investment analysis

  1. Fails to consider the timing of project cash flows.
  2. Considers only the project's contribution to net income and does not consider cash flow effects.
  3. Always yields the same accept/reject decisions for independent projects as the net present value method.
  4. Always yields the same accept/reject decisions for mutually exclusive projects as the net present value method.

Answer(s): C

Explanation:

The profitability index is the ratio of the present value of future net cash inflows to the initial net cash investment. It is a variation of the net present value (NPV) method and facilitates the comparison of different-sized investments. Because it is based on the NPV method, the profitability index will yield the same decision as the NPV for independent projects. However, decisions may differ for mutually exclusive projects of different sizes.




Details: Ranking Investment Projects 19

If an investment project has a profitability index of 1.15,the

  1. Project's internal rate of return is 15%.
  2. Project's cost of capital is greater than its internal rate of return.
  3. Project's internal rate of return exceeds its net present value.
  4. Net present value of the project is positive.

Answer(s): D

Explanation:

The profitability index is the ratio of the present value of future net cash inflows to the initial net cash investment. It is a variation of the NPV method that facilitates comparison of different-sized investments. A profitability index greater than 1.0 indicates a profitable investment or one that has a positive net present value.




Details: Ranking Investment Projects 19

The technique used to evaluate all possible capital projects of different dollar amounts and then rank them according to their desirability is the

  1. Profitability index method.
  2. Net present value method.
  3. Payback method.
  4. Discounted cash flow method.

Answer(s): A

Explanation:

The profitability index is the ratio of the present value of future net cash inflows to the initial cash investment; that is, the figures are those used to calculate the net present value (NPV), but the numbers are divided rather than subtracted. This variation of the NPV method facilitates comparison of different-sized investments. It provides an optimal ranking in the absence of capital rationing.




Details: Ranking Investment Projects 19

The profitability index (present value index)

  1. Represents the ratio of the discounted net cash outflows to cash inflows.
  2. Is the relationship between the net discounted cash inflows less the discounted cash outflows divided by the discounted cash outflows.
  3. Is calculated by dividing the discounted profits by the cash outflows.
  4. Is the ratio of the discounted net cash inflows to discounted cash outflows.

Answer(s): D

Explanation:

The profitability index, also known as the excess present value index, is the ratio of the present value of future net cash inflows to the initial net cash investment (discounted cash outflows). This tool is a variation of the NPV method that facilitates comparison of different-sized investments.




Details: Ranking Investment Projects 19

The method that divides a project's annual after--tax net income by the average investment cost to measure the estimated performance of a capital investment is the

  1. Internal rate of return method.
  2. Accounting rate of return method.
  3. Payback method.
  4. Net present value (NPV) method.

Answer(s): B

Explanation:

The accounting rate of return uses undiscounted net income (not cash flows) to determine a rate of profitability. Annual after-tax net income is divided by the average carrying amount (or the initial value) of the investment in assets.



Share your comments for Financial CMA exam with other users:

M
Mchal
7/20/2023 3:38:00 AM

some questions are wrongly answered but its good nonetheless

S
Sonbir
8/8/2023 1:04:00 PM

how to get system serial number using intune

M
Manju
10/19/2023 1:19:00 PM

is it really helpful to pass the exam

L
LeAnne Hair
8/24/2023 12:47:00 PM

#229 in incorrect - all the customers require an annual review

A
Abdul SK
9/28/2023 11:42:00 PM

kindy upload

A
Aderonke
10/23/2023 12:53:00 PM

fantastic assessment on psm 1

S
SAJI
7/20/2023 2:51:00 AM

56 question correct answer a,b

R
Raj Kumar
10/23/2023 8:52:00 PM

thank you for providing the q bank

P
piyush keshari
7/7/2023 9:46:00 PM

true quesstions

B
B.A.J
11/6/2023 7:01:00 AM

i can´t believe ms asks things like this, seems to be only marketing material.

G
Guss
5/23/2023 12:28:00 PM

hi, could you please add the last update of ns0-527

R
Rond65
8/22/2023 4:39:00 PM

question #3 refers to vnet4 and vnet5. however, there is no vnet5 listed in the case study (testlet 2).

C
Cheers
12/13/2023 9:55:00 AM

sometimes it may be good some times it may be

S
Sumita Bose
7/21/2023 1:01:00 AM

qs 4 answer seems wrong- please check

A
Amit
9/7/2023 12:53:00 AM

very detailed explanation !

F
FisherGirl
5/16/2022 10:36:00 PM

the interactive nature of the test engine application makes the preparation process less boring.

C
Chiranthaka
9/20/2023 11:15:00 AM

very useful.

S
SK
7/15/2023 3:51:00 AM

complete question dump should be made available for practice.

G
Gamerrr420
5/25/2022 9:38:00 PM

i just passed my first exam. i got 2 exam dumps as part of the 50% sale. my second exam is under work. once i write that exam i report my result. but so far i am confident.

K
Kudu hgeur
9/21/2023 5:58:00 PM

nice create dewey stefen

A
Anorag
9/6/2023 9:24:00 AM

i just wrote this exam and it is still valid. the questions are exactly the same but there are about 4 or 5 questions that are answered incorrectly. so watch out for those. best of luck with your exam.

N
Nathan
1/10/2023 3:54:00 PM

passed my exam today. this is a good start to 2023.

1
1
10/28/2023 7:32:00 AM

great sharing

A
Anand
1/20/2024 10:36:00 AM

very helpful

K
Kumar
6/23/2023 1:07:00 PM

thanks.. very helpful

U
User random
11/15/2023 3:01:00 AM

i registered for 1z0-1047-23 but dumps qre available for 1z0-1047-22. help me with this...

K
kk
1/17/2024 3:00:00 PM

very helpful

R
Raj
7/24/2023 10:20:00 AM

please upload oracle 1z0-1110-22 exam pdf

B
Blessious Phiri
8/13/2023 11:58:00 AM

becoming interesting on the logical part of the cdbs and pdbs

L
LOL what a joke
9/10/2023 9:09:00 AM

some of the answers are incorrect, i would be wary of using this until an admin goes back and reviews all the answers

M
Muhammad Rawish Siddiqui
12/9/2023 7:40:00 AM

question # 267: federated operating model is also correct.

M
Mayar
9/22/2023 4:58:00 AM

its helpful alot.

S
Sandeep
7/25/2022 11:58:00 PM

the questiosn from this braindumps are same as in the real exam. my passing mark was 84%.

E
Eman Sawalha
6/10/2023 6:09:00 AM

it is an exam that measures your understanding of cloud computing resources provided by aws. these resources are aligned under 6 categories: storage, compute, database, infrastructure, pricing and network. with all of the services and typees of services under each category

AI Tutor 👋 I’m here to help!