- This topic has 5 replies, 2 voices, and was last updated 8 years ago by John Moffat.
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- November 21, 2015 at 6:52 pm #284388
Does the examiner always tell whether a project is divisible or not?
If a question gives us the initial outlay plus the inflow per yr and the cost of capital? how do your find the NPV?
investment *1
then inflow * 1 yr discount factor ryt?The question is TYU 10 in kaplan text pg 153?
can u help me out
they have done it like this inflow per yr/0.1 and then ini investment minused
cost of capital is 10%November 22, 2015 at 8:30 am #284445If there is capital rationing the the question will tell you if the projects are divisible or not (if there is not capital rationing then it is irrelevant).
I don’t have the Kaplan Study text so I can’t help you with the second question, however our lectures are a complete course and cover everything needed to F9 – if you are watching our lectures throughout you don’t need a Study Text, just an Exam Kit in order to practice exam standard questions.
November 22, 2015 at 12:04 pm #284515yeah, I have watched it but u can answer this-
If a question gives us the initial outlay plus the inflow per yr and the cost of capital? how do your find the NPV?
November 22, 2015 at 12:40 pm #284533You discount each of the inflows using the tables provided, and subtract the initial outflow.
If you have watched the lectures then I don’t really understand why you are having to ask this. Maybe I am misunderstanding your question but this is really Paper F2.
November 22, 2015 at 2:30 pm #284579I got it, bit confused with wen they say annual cash flow in perpetuity thnks for the reply anyway 🙂
November 22, 2015 at 4:07 pm #284613You didn’t say that it was in perpetuity (and as I said, I don’t have the Kaplan Study Text) 🙂
The discount factor for a perpetuity is 1/r where r is the discount rate.
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