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chapter 9

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FM Exams › chapter 9

  • This topic has 3 replies, 2 voices, and was last updated 7 months ago by John Moffat.
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  • November 7, 2021 at 7:48 am #640094
    johnbriane
    • Topics: 146
    • Replies: 147
    • ☆☆☆

    sir in the example 2 of the free lectures you had stated that

    “the minute we sell this machine in two years time, we will buying a new machine .
    and we assume the same cashflows keep getting repeated …
    meaning 72972 will get incurred every two years …2,4,and so on…”

    i did not understand how $72972 will get repeated …
    what does that mean sir

    thank you in advance

    November 7, 2021 at 8:37 am #640108
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 49622
    • ☆☆☆☆☆

    72,972 is the PV of just one 2 year cycle.

    The 2 year cycle keeps getting repeated every two years and therefore the PV each time it is repeated is 72,972.

    November 7, 2021 at 8:52 am #640116
    johnbriane
    • Topics: 146
    • Replies: 147
    • ☆☆☆

    so that means the scrap value also should be unchanged uncluding the cashflows right sir ?

    November 7, 2021 at 3:07 pm #640164
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 49622
    • ☆☆☆☆☆

    As I state in my lectures, a big assumption that we always make is that the cash flows (including the scrap value) stay the same every time we replace the asset.

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