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@frry06 said:
Same thing happened to me. Exam felt quite easy except some of the MCQ, but then I only scored 52. Big disappointment.Exactly! It’s not so much the score that bothers me as long as I pass, but it’s the realization that I have misjudged my performance significantly and it is shattering my confidence for my following attempts (of Professionals). Examiner reports/marking keys all seem to have failed me. Oh well!
I was so confident that I’d score well above 80 but I barely passed at 53%. I’m grateful that I cleared the exam but this is so unexpected.
Unlikely, because I have already paid my subscription fee (along with my March Exam Session Fee) but I’m unable to access it either.
Ohhh! I didn’t know that the nature of assets is irrelevant in this case; your answer clarifies everything!
You’re a lifesaver, thankyouuu Sir! 🙂
The exact question reads:
Division D of Erie Ltd is considering a project which will increase annual profit by $15,000, but will require average receivables to increae by $100,000. The company’s target return on investment is 10%, and the imputed interest cost of capital is 9%. Division D currently earns a return on investment of 13%.
Would the return on investment (ROI) and Residual Income (RI) performance measures motivate the manager of Division D to act in the interest of Erie Ltd as a whole?
A. The ROI would, but the RI wouldn’t
B. The RI would, but the ROI wouldn’t
C. Both would motivate
D. Neither would motivateThankyou, that makes sense! 🙂
Similar to this question, there’s another one where we’re only provided with the following information for a new project:
1. Increase in profit figure ($12,000)
2. Increase in average receivables level figure ($100,000)
3. R.O.I target for company (10%)
4. Divisions Current R.O.I Level (13%)
5. Notional Interest Rate (9%)They’ve then asked us to figure out on the basis of result of which of the two, (R.I or R.O.I) will the manager make decision in the interest of the company as a whole!
What I don’t understand is the relevance of the Receivables in the required calculations? Also considering the lack of information on Capital Employed, how can we be expected to suggest an answer in this situation?
(The suggested answer claims BOTH figures’ result will motivate the manager to make the decision in favour of the company as a whole!)
