CIMA P2 Chapter 13 Test
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Question 3 required me to pay attention to detail-consider NPV not PV.
I think question 3 is incorrect.
The profitability index numbers show the order of projects we would like to invest in is B, A, C, D. The total amount we have available for investment would cover all of projects B, A, C and so D would be left out. So why does the answer state that we would miss out on C and complete 75% of D instead. Am I missing something?
Should the answer be 710,000 when choosing QQ and RR?
Yes you are right
No. The NPV that is required is the total inflows less total investment 710,000 – 345,000 = 365,000