Exam CIMAPRA19-P03-1 Topic 2 Question 153 Discussion

Actual exam question for CIMA's CIMAPRA19-P03-1 exam
Question #: 153
Topic #: 2
A project requires a capital investment of £2.7million. The project will save £450,000 each year after taxation. Assume the savings are in perpetuity. The business risk of the venture requires a 15% discount rate. The company has to borrow £1million to finance the project at a rate of 9% and the net tax shield is 30%, the project supports debt which generates an interest tax shield of 0.30 x 0.09 x £1million, which is £27,000 per year in perpetuity.
Calculate the project's adjusted present value.

Suggested Answer: B Vote an answer

by Oswald at Mar 30, 2026, 05:53 AM

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