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May 9, 2023 at 8:39 pm
Thank You sir for the free lectures.
I got all answers correct.
December 28, 2021 at 3:48 pm
thanks… Got it
John Moffat says
December 28, 2021 at 5:05 pm
August 25, 2021 at 7:26 pm
In question 2, we take first rate as 12%, can we assume second rate 13%, is there will be a problem if I assume second rate to be nearest to the first rate?
August 26, 2021 at 6:47 am
It would not be sensible at all to use a second rate of 13%. All the four choices are higher than 13% and so obviously the NPV at 13% will still be positive. As I explain in my free lectures the relationship is not linear and choosing 12% and 13% will not give a good approximation at all to the IRR.
September 10, 2020 at 11:25 am
sir in payback period question 3 and 4.. shouldnt it be 2years cz 270-230=40/100 +2= 2.4 year nd in question 4 259310-270000/303830 so it’s 3.24 year sir i have watched your lecture twice. and i dont know but im not getting the same answer as in the practice question
December 27, 2020 at 2:58 pm
2.4 year means more than 2 years and within 3 years. Similarly, 3.24 years mean more than 3 years and within 4 years.
December 12, 2019 at 7:26 pm
please help me solve this…….how will the cash flows look like? able ltd is considering a new project for which the following information is available: initial cost $300000 expected life 5yrs estimated scrap value $20000 addition revenue from the project- $120000per year incremental cost of the project $30000per year cost of capital-10% calculate the NPV?
December 13, 2019 at 8:38 am
In future please ask this sort of question in the Ask the Tutor Forum, and not as a comment on a lecture.
There is a cash outflow of 300,000 at time 0. There is an annuity of 90,000 (120,000 – 30,000) per year from years 1 to 5. There is an inflow of 20,000 at time 5.
September 25, 2019 at 8:44 am
How do we get 20% in the second question while discounting?I understand the questions given in the notes have given different percentage figures. I don’t understand how to apply it here.
September 25, 2019 at 1:49 pm
As I explain in my free lectures (and as the answer to this question explains) you can use any two rates of interest – it does not have to be 12% and 20%.
September 26, 2019 at 3:15 pm
September 27, 2019 at 8:56 am
You are welcome 🙂
March 13, 2022 at 10:59 pm
Any two rates of interest on the table or any two rates of interest from the option given in the question?
March 14, 2022 at 6:13 am
Any two as I wrote before and as I explain in the lectures. If rates are given in the question then it makes sense to make use of them.
September 23, 2019 at 6:47 pm
Why we used operating profits for payback in this question?where payback should be calculated on returns….
September 24, 2019 at 8:03 am
Payback period should be calculated using the cash flows, as explained in our free lectures.
If you are referring to question 1, then the question has given the operating cash flows and not the operating profits.
July 11, 2019 at 7:39 pm
In this question, isn’t the NPV negative? (33,830)
August 4, 2019 at 3:39 pm
It is positive
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