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Digunder Dec 2007

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › Digunder Dec 2007

  • This topic has 1 reply, 2 voices, and was last updated 8 years ago by John Moffat.
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  • July 31, 2016 at 6:53 pm #330454
    sattar786
    Member
    • Topics: 24
    • Replies: 23
    • ☆

    Hello sir, could you kindly tell me as in how did the examiner get the current price as $ 28million, since we’re told that npv is $4 million at cost of capital of 10% p.a

    July 31, 2016 at 8:44 pm #330474
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54707
    • ☆☆☆☆☆

    The NPV is $4M, the initial cost is $24M, and therefore the PV of the receipts must be 4 + 24 = $28M.

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