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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › BPP Practice Kit – Seal Island
In the solution, under a (iii) sensitivity analysis, decommissioning costs must increase by $122.2/0.1571. Kindly explain how we get 0.1571.
It is (1.04/1.1)^33)
1.04 because there is inflation of 4% per year; 1.1 because the cost of capital is 10% per year; and 33 because it is in 33 years time.
Thanks Mr. Moffat.
You are welcome 🙂