CIMA Advanced Management Accounting P2 Question # 54 Topic 6 Discussion

CIMA Advanced Management Accounting P2 Question # 54 Topic 6 Discussion

P2 Exam Topic 6 Question 54 Discussion:
Question #: 54
Topic #: 6

A machine requires an initial investment of $500,000. The net present value (NPV) of the investment in the machine is $36,500.

Which of the following statements is correct in relation to the sensitivity of the investment?


A.

The initial investment can increase by no more than 7.3% before the project is not viable.


B.

The NPV can decrease by no more than 7.3% before the project is not viable.


C.

The initial investment can increase by no more than 13.7% before the project is not viable.


D.

The NPV can decrease by no more than 13.7% before the project is not viable.


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