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CASH FLOW

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › CASH FLOW

  • This topic has 1 reply, 2 voices, and was last updated 2 years ago by P2-D2.
Viewing 2 posts - 1 through 2 (of 2 total)
  • Author
    Posts
  • August 15, 2022 at 4:31 am #663091
    Eunice03
    Participant
    • Topics: 88
    • Replies: 70
    • ☆☆

    LichenCo owns amachine that has a carrying amount of $85,000 at the year end of
    31 March 20X9.Its market value is $78,000 and costs of disposal are estimated at $2,500.
    A new machine would cost $150,000. LichenCo expects it to produce net cashflows of
    $30,000perannum for the next three years.The cost of capital of LichenCo is 8%.
    ANS
    Good day sir, I tried calculating the net cashflows for the 3 years as (30000*3)/(1.08)^3 and it was wrong. Please can you explain why?

    August 20, 2022 at 1:21 pm #663759
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 7163
    • ☆☆☆☆☆

    Hi,

    You need to calculate the annuity factor for three years at 8% to work out the present value of the 30,000.

    Thanks

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    Posts
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