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ACCA F9 exam kit September 2016

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FM Exams › ACCA F9 exam kit September 2016

  • This topic has 3 replies, 2 voices, and was last updated 3 years ago by John Moffat.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • February 16, 2022 at 10:42 am #648715
    joanna25
    Member
    • Topics: 1
    • Replies: 2
    • ☆

    Dear Sir
    Question 71 in section A of the above is:
    Data of relevance to the evaluation of a particular projekt are given below:cost of capital in Real time : 10% per annum
    Expectet inflation :8%per annum, Expected increase in the project’s annual cash flow:6% per annum,Expected increase in the project’s annual cash flow : 4% per annum
    Which one of the following seta of adjustments will lead to the correct NPN being calculated?
    The answer is B :
    Cash inflow :6% p.a. increase
    Cash outflow 4% p.a. Increase
    Discount percentage :18.8%

    Please can you explain why?

    February 16, 2022 at 4:11 pm #648724
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54680
    • ☆☆☆☆☆

    As I explain in my free lectures on investment appraisal with inflation, we discount the nominal/actual cash flows at the nominal/actual cost of capital.

    To get the actual cash flows we inflate them at whatever rate of inflation applies to the flows.

    To get the actual cost of capital we use the Fisher formula that is given in the exam (as again I do explain in my lectures).

    (I do also suggest that you buy a current edition of the Revision Kit because there have see syllabus changes since 2016! )

    February 16, 2022 at 7:22 pm #648734
    joanna25
    Member
    • Topics: 1
    • Replies: 2
    • ☆

    Thank you

    February 17, 2022 at 5:53 am #648747
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54680
    • ☆☆☆☆☆

    You are welcome 🙂

  • Author
    Posts
Viewing 4 posts - 1 through 4 (of 4 total)
  • The topic ‘ACCA F9 exam kit September 2016’ is closed to new replies.

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