Cima P2 Exam Question No 12

Question No 12:

A company has a cost of capital of 12% and a maximum of $20 million to invest. It has identified three possible investment projects, none of which is divisible, as follows.

Which project(s) should the company invest in?

A. Project 1 only
B. Project 2 only
C. Project 3 only
D. Projects 1 and 3 only

Answer: D

Cima P2 Exam Question No 11

Question No 11:

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.

A. Sensitivity analysis
B. Probability analysis
C. Scenario analysis
D. Adjusting the discount rate to reflect risk.

Answer: A

Cima P2 Exam Question No 10

Question No 10:

A company has a cost of capital of 12% and a maximum of $20 million to invest. It has identified three possible investment projects, none of which is divisible, as follows.





Which project(s) should the company invest in?

A. Project 1 only
B. Project 2 only
C. Project 3 only
D. Projects 1 and 3 only

Answer: D

Cima P2 Exam Question No 9

Question No 9:

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.

A. Sensitivity analysis
B. Probability analysis
C. Scenario analysis
D. Adjusting the discount rate to reflect risk.

Answer: A

Cima P2 Exam Questions No 8

Question No 8:

A company has a maximum of $2 million to invest and has identified four viable projects, E, F, G and H.
The initial investment for each of the projects is the maximum amount that can be invested in the project, but any amount up to the maximum can be invested. The projects are divisible.
The projects have been evaluated using net present value, as below. All figures are $ millions.

 

In which project should the company invest $2 million?

A. Project E
B. Project F
C. Project G
D. Project H

Answer: B