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Asset replacement

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FM Exams › Asset replacement

  • This topic has 1 reply, 2 voices, and was last updated 1 year ago by John Moffat.
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  • October 10, 2020 at 4:12 pm #588533
    phuongmore
    • Topics: 65
    • Replies: 75
    • ☆☆

    Dear sir, please help me to explain why the following sentences is wrong:” asset replacement decision require relevant cash flow to be discounted be the after tax cost of debt”.Is it require to use cost of capital to discount? But I do not understand the reason why.

    October 11, 2020 at 10:26 am #588583
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 50522
    • ☆☆☆☆☆

    We always use the overall WACC when we are appraising projects. I do explain the reasons is my free lectures on the cost of capital.

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