Thank you for the amazing lectures. I am a bit confused here, in the example 1- we are given with NPV @10% in the notes. but you took the NPV as 100% while calculating the total NPV. What am I missing here ?

The NPV given in the study text is already calculated at 10%. 10% given there does not mean that we should take that fraction of the total but it means that after calculating the outflows and inflows our present value has been discounted by the rate of 10% giving us the NPV totals of 50, 57, 36 and 50 for each of the project. Take project 1 as an example, you discount each of the inflows using present value table at 10% giving you 201 for year 1, 183 for year 2 and 166 for year 3, take away the original investment of 500 and you are left with the NPV of 50 (subject to small rounding).

Hello Mr. Moffat,
Thanks for your well explained lecture, I just slipped the idea behind the selection of the best possibility for part c of example 1
why didn’t we assume the same like in part b and would have chosen also based on the NPV per $ invested so that our answer to be directly D + C + A ?
can you explain that sir.

We only use NPV/$ when the projects are divisible. In part (c) they are not divisible – we either do all of the project or none of it – and therefore we can only take the approach I use in the lecture.

Why is it so hard to pass FM exam?What’s the possible best approach to pass this exam?
Thank you I am currently using your lectures and notes.Thank you.

Pratibhapahwa4313 says

Thank you for the amazing lectures. I am a bit confused here, in the example 1- we are given with NPV @10% in the notes. but you took the NPV as 100% while calculating the total NPV. What am I missing here ?

patrycjajot says

The NPV given in the study text is already calculated at 10%. 10% given there does not mean that we should take that fraction of the total but it means that after calculating the outflows and inflows our present value has been discounted by the rate of 10% giving us the NPV totals of 50, 57, 36 and 50 for each of the project. Take project 1 as an example, you discount each of the inflows using present value table at 10% giving you 201 for year 1, 183 for year 2 and 166 for year 3, take away the original investment of 500 and you are left with the NPV of 50 (subject to small rounding).

prottoyqhan says

1:48 mr.Mofat your hilarious 馃榾

John Moffat says

馃檪

aliahmed1994 says

I liked the 1:48 part also.

a7mdsuliman says

Hello Mr. Moffat,

Thanks for your well explained lecture, I just slipped the idea behind the selection of the best possibility for part c of example 1

why didn’t we assume the same like in part b and would have chosen also based on the NPV per $ invested so that our answer to be directly D + C + A ?

can you explain that sir.

John Moffat says

We only use NPV/$ when the projects are divisible. In part (c) they are not divisible – we either do all of the project or none of it – and therefore we can only take the approach I use in the lecture.

faith20ul19 says

Thank you for this one John. I always enjoy watching your video lectures.

John Moffat says

It needs study and practice.

Watch all of my lectures and then practice every question in your Revision Kit and learn from your mistakes.

If you have a problem then ask in the Ask the Tutor forum.

cartea says

Why is it so hard to pass FM exam?What’s the possible best approach to pass this exam?

Thank you I am currently using your lectures and notes.Thank you.

Bazomdunia says

THREE RULES TO PASSING!!

1 .PRACTICE!!!

2. PRACTICE!!

3. AND PRACTICE!!