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Q1) I gave f2 very recently. One of the questions asked was about IRR. where fixed cost was given i dont remember the exact figure (eg: $234000) and 2 other values like 10% has $12000 and 12% has $15000. they did not provide with a negative NPV. how do we find it out then?
Q2) another question is what is dysfunction decision making by manager?
Q3)what are notional units?
Q4)can we use divisional profit if PBIT is not given?
I would really appreciate if you could clear my doubts. Thank you
I will answer you, but all of the above questions are dealt with in my free lectures – the lectures are a complete free course for Paper F2 and cover everything needed to be able to pass the exam well.
1. It is not necessary to have a negative NPV. Any two ‘guesses’ will do. Having one positive and one negative gives a better approximation, but whatever guesses are chose the IRR is only ever an approximation because the relationship is lot linear.
2. Dysfunctional decision making is where the manager makes decisions that are good for him/her (or for the division), but that are not good for the company as a whole.
3. Notional means ‘not-real’. The term is relevant in process costing where we calculate the equivalent (notional units) which is not the same as the actual number of whole units produced.
4. It depends what you are trying to calculate!!
I have only recently started making use of this website and I must say it was very helpful! Thank you so much
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