CompTIA
Checkpoint
ISC
HP
Dell
EC-Council
EXIN
Fortinet
ITIL®
Juniper
PMI
Microsoft
VMware
Avaya
Google
Salesforce
Amazon
Palo Alto Networks
Certiport
ISC2
All Vendors
  2. Home
  3. Exams
  4. Financial
  5. CMA

Free CMA Exam Braindumps (page: 17)

Page 17 of 336
PDF with 1336 Questions
View Related Case Study

A weakness of the internal rate of return (IPP) approach for determining the acceptability of investments is that it

  1. Does not consider the time value of money.
  2. Is not a straightforward decision criterion.
  3. Implicitly assumes that the firm is able to reinvest project cash flows at the firm's cost of capital.
  4. Implicitly assumes that the firm is able to reinvest project cash flows at the project's internal rate of return.

Answer(s): D

Explanation:

The IRR is the rate at which the discounted future cash flows equal the net investment (NPV = 0). One disadvantage of the method is that inflows from the early years are assumed to be reinvested at the IRP. This assumption may not be sound. Investments in the future may not earn as high a rate as is currently available.



View Related Case Study

The internal rate of return (IRR) is the

  1. Hurdle rate.
  2. Rate of interest for which the net present value is greater than 1.0.
  3. Rate of interest for which the net present value is equal to zero.
  4. Rate of return generated from the operational cash flows.

Answer(s): C

Explanation:

The IRR is the interest rate at which the present value of the expected future cash inflows is equal to the present value of the cash outflows for a project. Thus1 the IRR is the interest rate that will produce a net present value (NPV) equal to zero. The IRR method assumes that the cash flows will be reinvested at the internal rate of return.



View Related Case Study

A project requires an initial cash investment at its inception of $10,000, and no other cash outflows are necessary. Cash inflows from the project over its 3-year life are $6,000 at the end of the first year, $5,000 at the end of the second year, and $2,000 at the end of the third year. The future value interest factors for an amount of $1 at the firm's desired rate of return of 8% are


The modified IRR (MIRR)for the project is closest to

  1. 8%
  2. 9%
  3. 10%
  4. 12%

Answer(s): D

Explanation:

The MIRR is the interest rate at which the present value of the cash outflows discounted at the firm's desired rate of return equals the present value of the terminal value. The terminal value is the future value of the cash inflows assuming they are reinvested at the firm's desired rate of return. The present value of the outflows is $10,000 because no future outflows occur. The terminal value is $14,396 [($6,000 x 1.166) + ($5,000 x 1.08) + ($2,000 x 1.00)]. Accordingly, the present value of $1 interest factor for the rate at which the present value of the outflows equals the present value of the terminal value is .695 ($10,000 ÷ $14,396). This factor is closest to that for 12%.



View Related Case Study

Suzie owns a computer reselling business and is expanding it. She is presented with two options. Under Proposal A, the estimated investment for the expansion project is $85,000, and it is expected to produce after--tax cash flows of $25,000 for each of the next 6 years. Proposal B involves an investment of $32,000 and after-tax cash flows of $10,000 for each of the next 6 years. Between which two desired rates of return will Suzie be indifferent to either proposal?

  1. 10%andl2%.
  2. 14%andl6%.
  3. 16%andl8%.
  4. 18%and2o%.

Answer(s): C

Explanation:

The desired rate of return at which the two projects will produce the same NPV can be found by calculating the IRR of the difference in cash flows between the two projects. Proposal A requires an additional investment of $53,000 and generates extra cash flows of $15,000 for 6 years. Dividing the incremental investment by the annual cash flows yields a result of 3.533 ($53,000 + $15000). In other words, this is the present value factor necessary to make the cash flows equal the incremental investment. Consulting the present value table for an ordinary annuity for 6 years reveals that 3.533 is somewhere between 16% and 18%.



Page 17 of 336



Post your Comments and Discuss Financial CMA exam with other Community members:

nancy commented on March 16, 2024
Good to learn from here
INDIA
upvote

Tacy commented on October 18, 2023
Awesome content
Anonymous
upvote

Georgodino commented on April 29, 2021
The study package is helpful in passing your exam since the practice questions are copied from real exam. But in order to learn the modules in details you need books.
ARGENTINA
upvote

Joe commented on May 16, 2019
Just Bought it, will share result with you.
Anonymous
upvote

emad hamdy commented on May 03, 2019
great for passing not so good for learning. Just use it as cheat sheet.
UNITED STATES
upvote

Amer Alnajjar commented on March 11, 2019
Still the test is under process
Anonymous
upvote

Exam Passer commented on December 06, 2018
I wrote the exam yesterday and it was a great success. Good job guys.
UNITED ARAB EMIRATES
upvote

Muhannad commented on October 09, 2018
Easy way to download
Anonymous
upvote

Harshavardhan Yedla commented on October 02, 2017
good
UNITED STATES
upvote

James commented on February 23, 2017
Ok just downloaded this exam....looks pretty damn good to me..I think this will help me pass easily.
UNITED STATES
upvote

RYAN commented on December 24, 2016
I JUST BOUGHT THIS AND I WILL BE SURE IT IS HELPFUL!! I'LL LET YOU KNOW AFTER TAKING EXAM.
UNITED STATES
upvote

KT commented on December 17, 2016
I just bought the test bank. I will provide a feedback once I start going through it and studying.
UNITED STATES
upvote

Sachin commented on May 16, 2016
Seems to be a great Stuff. Needs to prepare for the exam and hope it will be very useful.
UNITED ARAB EMIRATES
upvote

Sairam Beeman commented on January 05, 2016
very bad. pdf e-book not downloading. Latest updated questions not available. Waste of money. Don't buy this product.
UNITED STATES
upvote

Mik commented on October 08, 2015
I have difficulties downloading the CMA material! I hope that the product is right. Could anyone help me in downloading this please?
JORDAN
upvote