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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FM Exams › Investment Appraisal Doubt
Section B of the Kaplan Kit
Dong is assessing a project in which the first of four annual lease payments has been agreed at $120000.This is payable in one year’s time and subsequent payments will rise by 4% per annum.Dong’s proper money cost of capital is 8%.
What is the present value of Dong’s last payment that will be made in four years’ time(to the nearest $000)?
(Can I have the answer with the workings please?)
I don’t understand why you are asking me for the answer given that the Kaplan Kit contains answers!!
The payment in 4 years time will be 120,000 x 1.04^3.
This is then discounted for 4 years time at 8% in the normal way.