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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FM Exams › Calculation of ARR
Please tell why scrap value is added to average capital investment?
Because we are trying to find the average SOFP value of the asset, and the average is the (initial cost + the scrap value) / 2
I do explain this, and the reason for it, in my free lectures on investment appraisal.
The lectures are a complete free course for Paper FM and cover everything needed to pass the exam well.
