Free Practice CIMA CIMAPRA19-P02-1-ENG Exam Questions 2025

Stay ahead with 100% Free P2 Advanced Management Accounting (Online) CIMAPRA19-P02-1-ENG Dumps Practice Questions

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Total 205 Questions | Updated On: Apr 22, 2025

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Question 1

A company is investing $150,000 in a project which will yield an annual cash inflow of $40,000 for eight years. The company's cost of capital is 10%.
To the nearest $100, what is the project's equivalent annual net present value?

A : $11,900

B : $7,900

C : $63,400

D : $21,300

Answer: A

Question 2

When considering a capital investment, relevant costs for decision making have which THREE of the following features?

A : They are future costs.

B : They are committed costs.

C : They are incremental costs.

D : They are unavoidable costs.

E : They are cash flows.

Answer: A,C

Question 3

Division A is an investment centre with assets of $7.3 million. The following is an extract from the annual budget for division A:

The cost of capital is 14%.
Calculate the residual income for division A.

A : $808,000

B : $1,727,800

C : $358,000

D : $2,008,000

Answer: A

Question 4

A project has a positive net present value (NPV) when discounted at a company's weighted average cost of capital (WACC). The project has also been evaluated using a range of other investment appraisal techniques.
It has now been recognized that the project is of much higher risk than the average risk of the company's existing portfolio of projects. It has therefore been decided that the discount rate to be used when evaluating this project should be the WACC adjusted for risk.
As the result of changing the discount rate as described, which of following statements are correct?
Select ALL that apply.

A : The net present value would decrease.

B : The internal rate of return would decrease.

C : The accounting rate of return would decrease.

D : The internal rate of return would remain unchanged.

E : The profitability index would remain unchanged.

F : The net present value would increase.

Answer: A,D

Question 5

Which TWO of the following expressions are correct?

A : 1 + money rate = (1 + real rate) x (1 + inflation rate)

B : 1 + real rate = (1 + money rate) / (1 + inflation rate)

C : 1 + real rate = (1 + inflation rate) / (1 + money rate)

D : 1 + money rate = (1 + inflation rate) / (1 + real rate)

E : 1 + inflation rate = (1 + money rate) x (1 + real rate)

Answer: A,B

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Total 205 Questions | Updated On: Apr 22, 2025

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