- This topic has 3 replies, 2 voices, and was last updated 6 years ago by
John Moffat.
John Moffat.-
Posts
-
acca9
- Topics: 68
- Replies: 50
- ☆☆
Would it be possible to explain these two answers? Ive watched the lectures but for some reason im still getting stuck
Many thanks
John Moffat
- Topics: 57
- Replies: 50544
- ☆☆☆☆☆
I think we must be using different editions of the Revision Kit.
I have no 113 or 118 (although I do have a 11.3 and 11.8).acca9
- Topics: 68
- Replies: 50
- ☆☆
Im using the latest edition of the exam kit if that helps….
Question 113:
Juicy Co is considering investing in a new industrial Juicer for use on a new contract. It will cost $150, 000 and will last 2 years. Juicy Co pays corporation tax at 30% (as the cash flows occur) and, due to the health benefits of juicing the machine attracts 100%tax allowable depreciation immediately.
Given a cost of capital of 10% what is the minimum value of the pre-tax contract revenue receivable in 2 years which would be required to recover the net cost of the juicer?
A $150, 000
B $105, 000
C $127, 050
D $181, 500Question 118:
A project has the following cash flows:
T0 Outflow $110, 000
T1-T4 Inflow $40, 000At the companys cost of capital of 10% the NPV of the project is $16800
Applying sensitivity analysis to the cost of capital, what percentage change in the cost of capital would cause the project NPV to fall to zero?
A 70%
B 17%
C 5%
D 41%Thanks for all your help!
John Moffat
- Topics: 57
- Replies: 50544
- ☆☆☆☆☆
I have found the questions, but I really do not understand what you want from me!
The Revision Kit gives the answers and the workings for them, so you are going to have to say which bit of the workings you do not understand.
John Moffat- You must be logged in to reply to this topic.