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P2 Exam Dumps : Advanced Management Accounting

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Advanced Management Accounting Questions and Answers

Question 1

Which of the following is a correct description of the key features of net present value?

Options:

A.

It adjusts the relevant cash flows of a project to reflect the time value of money. The discount rate used is always the company's weighted average cost of capital.

B.

It adjusts the relevant cash flows of a project to reflect the time value of money. The discount rate used reflects the risk of the project.

C.

It adjusts the relevant profits of a project to reflect the time value of money. The discount rate used reflects the risk of the project.

D.

It adjusts the relevant cash flows of a project after the deduction of depreciation charges to reflect the time value of money. The discount rate used is always the company's weighted average cost of capital.

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Question 2

Which of the following correctly defines the expected value of a project?

Options:

A.

The weighted average of the possible outcomes of the project.

B.

The actual amount of incremental wealth that the project will generate.

C.

The most likely amount of incremental wealth that the project will generate.

D.

The present value of the positive cash flows that the project will generate.

Question 3

LL produces an item, the Z, for which the demand curve is estimated to be:

P = 10 - 0.0001Q

where, P is the unit price in $ and Q is the annual sales volume in units;

Marginal revenue (MR) = 10 - 0.0002Q

The variable cost of producing the Z is $2 per unit. The annual fixed costs of production are $110,000.

What is the profit maximizing output level?

Options:

A.

50,000 units

B.

45,000 units

C.

40,000 units

D.

35,000 units