IMANET Exam CMA Topic 2 Question 89 Discussion

Actual exam question for IMANET's CMA exam

Question #: 89
Topic #: 2

[All CMA Questions]

Which of the following is not a category of relevant cash flows'?

AAnnual net cash flows

BProject termination cash flows.

CIncremental cash flows.

DNet initial investment.

Show Suggested Answer

Suggested Answer: C

Relevant cash flows are a much more reliable guide when judging capital projects, since only they provide a true measure of a project's potential to affect shareholder value. The relevant cash flows can be divided into three categories. (1) net initial investment, (2) annual net cash flows, and (3) project termination cash flows. An incremental cash flow is the difference in cash received or disbursed resulting from selecting one option instead of another. It is not a category of relevant cash Bows.

by Stephaine at Jun 03, 2024, 02:20 AM

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Dalene

5 months ago

Wait, are we sure this isn't a 'which one doesn't belong' type of question? I'm feeling a little suspicious here.

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Jesusita

4 months ago

I agree, that seems like the odd one out.

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Crista

4 months ago

I think it's B) Project termination cash flows.

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Floyd

4 months ago

D) Net initial investment.

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Tresa

4 months ago

C) Incremental cash flows.

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Dottie

4 months ago

B) Project termination cash flows.

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Mi

5 months ago

A) Annual net cash flows

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Loren

6 months ago

Net initial investment? Seriously? That's clearly a relevant cash flow category. What is this, a trick question?

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Ressie

5 months ago

Yes, it is. The question must be trying to trick us.

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Novella

5 months ago

Net initial investment is actually a relevant cash flow category.

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Virgie

5 months ago

D) Net initial investment.

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Glendora

5 months ago

C) Incremental cash flows.

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Starr

5 months ago

B) Project termination cash flows.

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Queen

5 months ago

A) Annual net cash flows

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Lai

6 months ago

Incremental cash flows? That's the way to go. It's the only logical choice here.

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Leslie

5 months ago

C) Incremental cash flows.

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Lindsey

5 months ago

B) Project termination cash flows.

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Loise

5 months ago

A) Annual net cash flows

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Ludivina

6 months ago

I'm going with Project termination cash flows. Those are definitely relevant, right?

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Cherry

5 months ago

D) Net initial investment is another category of relevant cash flows to consider.

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Glory

6 months ago

C) Incremental cash flows are also considered relevant in cash flow analysis.

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Carmela

6 months ago

A) Annual net cash flows are definitely a category of relevant cash flows.

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Brendan

6 months ago

I agree with Hyman. Project termination cash flows are not relevant cash flows for decision making.

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Hyman

6 months ago

I think the answer is B) Project termination cash flows.

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Nana

6 months ago

Annual net cash flows? That's a no-brainer. It's definitely a relevant cash flow category.

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Marti

5 months ago

D) Net initial investment

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Ernestine

5 months ago

C) Incremental cash flows

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Beckie

5 months ago

A) Annual net cash flows

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Selene

5 months ago

C) Incremental cash flows

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Devon

5 months ago

A) Annual net cash flows

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Jaime

6 months ago

Annual net cash flows? That's a no-brainer. It's definitely a relevant cash flow category.

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Valentin

6 months ago

D) Net initial investment.

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Marjory

6 months ago

C) Incremental cash flows.

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Maurine

6 months ago

B) Project termination cash flows.

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Lou

6 months ago

A) Annual net cash flows

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