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In the exam I did: –
yr 1 $750 x compound yr 2 $750 x compound (2 time period) etc
Is this wrong? & I got $0 NPV for question no. 1.
2014 Exam paper now on ACCA website..
???
In question no 1 the $750 fixed costs were incremental meaning that the $750 should be compounded up each year by the compound fraction. An identical incremental fixed cost was included in the June 2013 NPV question which was also compounded up each year it is not just the change in the inflation amount year on year I don’t think.
June 2013 question/answer as follows: –
$250,000 Incremental Fixed Costs with inflation at 5% each year
Inflated outflows included in NPV calculation were: –
yr1 ($263) yr 2($276) yr 3 ($289) yr 4 ($304)
I did the above in yesterdays exam & got $0 NPV for the answer???
Slighty worried now, majority seem to have negative NPV, however, I got $0 NPV, which seems to tie in with one of the following questions!!!
Hi,
Q1 – not heard anyone saying that they didn’t inflate the figures in question and used the real rate of return which was 9%. I thought you could use real rate when figures quoted at year 0 and use nominal when quoted at future year values?
No way I passed exam, June 2013 for me!