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Tutor,
I refer to Chmura Co (12/13), question 67 b(ii) of Bpp revision kit.
The value of d1 = 0.589
The value of d2 = 0.094From the Table, N(d1) should be 0.5 + 0.2224 = 0.7224
N(d2) should be 0.5 + 0.0398 = 0.5398My question is how did they arrived at: N(d1) = 0.5 + 0.2220 = 0.7220 ?
N(d2) = 0.5 + 0.0375 = 0.5375 ?Thank you.
Ogo
Because d1 is 0.589, they have apportioned linearly between the table figures for 0.58 and 0.59.
There is no need to do this in the exam 🙂(same idea for d2)
A lot of thanks John.
So the answers:( N(d1) should be 0.5 + 0.2224 = 0.7224 and N(d2) should be 0.5 + 0.0398 = 0.5398) are equally acceptable in the exams?
Dear sir they say in the ques ….a bal adj is required… if so y r we nt deducting residual value while calculating cap all? If they said res value is after tax den we dont deduct it but here it is after inflation… Does it mean wen res value is after tax or after inflation the calculation wud b 1250÷ 10 in dis particular ques?
If you go to the link “Revision and past questions” from the main Paper P4 page, then you will find a link to lectures working through the whole of this question, which I think will answer you 🙂
Seen n understood :)…i use a slightly different method though…..one more thing in dis….wt is the deal with the word res value after INFLATION? It doesnt hve any numerical implications right:)?
Hi John,
The question says that tax allowable is available, of 10% straight line basis on machinery of 1200 MP. A balancing adjustment is required in year 5 end , when the machinery will be sold for MP 500 million.In the answer,in year 5,
tax allowable depreciation= (125)
balancing allowance = (125)
add back depreciation = 250
total =0What I did was,
less: book value at the end of year 5 less loss on machinery=(625-125) = (500)sale at the end of year 5 =500
total =0is it okay if I do this in the exam?
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