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Hi sir, could you please explain how to treat redundancy and lost contribution in this question. Cant i just deduct it as an expense in my NPV calculation? In BPP kit they have calculated NPV before these costs and said it will reduce NPV by 0.1 million, i dont understand how
The BPP answer is simply a reprint go the examiners own answer. It is odd that he gave the information in the question but did not include the amounts in his workings (even though it does not affect the decision).
If you discount the flows for the four years you get a PV of $140,678. The examiner has just stated it to the nearest $100,000 and has therefore written $0.1M.
Why cant i just deduct them directly in NPV calculation instead of calculating their PV seperately?
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