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BPP EXAM KIT Q53 WASHI (sEPT18)

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › BPP EXAM KIT Q53 WASHI (sEPT18)

  • This topic has 1 reply, 2 voices, and was last updated 11 months ago by John Moffat.
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  • February 23, 2022 at 11:20 am #649188
    shaunak22
    Participant
    • Topics: 217
    • Replies: 41
    • ☆☆☆

    sir in the question they have mentioned – The estimates are based on using the end of the first year, when the project commences, as the start of the project (Year 0). The numbers are given in ARD million.

    that would mean the project starts after 1 year and in the NPV layout shown in the question year 0 should be considered a s year 1 right?

    DOUBT – so if that is the case when we find out the present value of cash flow after taking into account additional adjsutment we should we year 1 12% discount factor to discount cash flow of year 0 and year 2 12% discount factor to discount cash flow of year 1 in the answer they havent done that why is that?

    February 23, 2022 at 11:59 am #649203
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 51543
    • ☆☆☆☆☆

    Despite the dreadful habit of the examiner mentioning ‘year 1’, ‘year 2’, etc.

    0, 1, 2 etc when we are discounting are not years but are points in time that are 1 year apart (just as was the case in Paper FM).

    Time 0 is the date of the first flow.

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