I30-63

Question

The investment team is evaluating several opportunities across six cities. The team leader has established the following financial criteria to guide investment decisions:
 
• Profit (defined as 5-year returns minus investment cost) must be at least $100 million
 
• The ratio of 5-year returns to investment cost must be at least 2
 
• The 5-year IRR (Internal Rate of Return) must be at least 20%The table below shows the investment data for six cities. All dollar amounts ($) are in millions.
      City   Investment Cost   5-Year Returns   10-Year Returns   IRR (5 Year)       A   $500   $600   $1300   10%       B   $700   $900   $1200   18%       C   $120   $600   $1000   30%       D   $400   $850   $2000   20%       E   $450   $500   $1500   5%       F   $50   $450   $600   45%The legal team has reviewed the potential risks associated with investing in each city. Their findings are summarized below:
 
• City A: New tax laws and strict environmental regulations are expected to reduce profitability and cause project delays. Investment is not recommended.
 
• City B: Ongoing political instability creates risks of disruption and asset damage. Investment is not recommended.
 
• City C: No risks identified.
 
• City D: A moratorium on large-scale developments is in place, risking indefinite project delays or cancellations. Investment is not recommended.
 
• City E: A history of expropriating foreign assets presents high risks to investment security. Investment is not recommended.
 
• City F: No risks identified.

Bunuel · Answer

Official Solution:

City D meets the financial criteria but is not recommended for investment based on the legal team’s review. 
 
• City D meets all financial criteria (profit, ratio, IRR) but is excluded because the legal team identified policy-based risks (specifically, a moratorium on large-scale developments that may delay or prevent project completion). Answer: True
 
 Cities C and F are the only investment opportunities that remain viable after all criteria are applied. 
 
• Tab 1 and Tab 2 show that City C and City F meet all financial criteria (profit, ratio, IRR). Tab 3 shows that these are the only cities without any risks identified by the legal team. Therefore, only City C and City F remain viable after applying all criteria. Answer: True.
 
 City E fails to meet both the financial criteria and the legal team’s risk guidelines. 
 
• Tab 1 and Tab 2 show that City E fails the financial criteria (profit is only $50m, ratio is 1.11, IRR is 5%). Tab 3 shows that the legal team also does not recommend investment in City E due to a history of expropriating foreign assets. Therefore, City E fails both financial and legal assessments. Answer: True.

Correct answer:

City D meets the financial criteria but is not recommended for investment based on the legal team’s review.  "True"

Cities C and F are the only investment opportunities that remain viable after all criteria are applied.  "True"

City E fails to meet both the financial criteria and the legal team’s risk guidelines.  "True"

JINXGMAT · Answer

For the second question, while I agree even I marked "true" as the correct answer in the beginning, but then I noticed that there could be wordplay related to "criteria" of investment selection v/s "review" of legal team ("review" plus "criteria" would leave just C&D as the answers but only Investment criteria gives us C,D & F as the answers". Hence, selected "false" as the final answer

Since this kind of wordplay happens often in other questions, just wanted to know how to identify the possible differences on when to take the in consideration.

Since this kind of wordplay happens often in other questions, just wanted to know how to identify the possible differences on when to take the in consideration.

Bunuel · Answer

Here, "all criteria" means both financial and legal factors.

I30-63

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My Rewards

City	Investment Cost	5-Year Returns	10-Year Returns	IRR (5 Year)
A	$500	$600	$1300	10%
B	$700	$900	$1200	18%
C	$120	$600	$1000	30%
D	$400	$850	$2000	20%
E	$450	$500	$1500	5%
F	$50	$450	$600	45%

True	False
		City D meets the financial criteria but is not recommended for investment based on the legal team’s review.
		Cities C and F are the only investment opportunities that remain viable after all criteria are applied.
		City E fails to meet both the financial criteria and the legal team’s risk guidelines.