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Forums › FIA Forums › MA2 Managing Costs and Finance Forums › Forecasting cash flows and capital investment appraisal
I would like a lecture videos in depth covering these two topics
Try here:
https://opentuition.com/acca/ma/acca-management-accounting-ma-lectures/
Chapters 17 and 23.
The syllabus is not quite the same as yours, so exercise care.
An individual is to receive an annuity of $5000 for ten years,at the end of each year.The present value of the annuities is $33,550. What is the cost of capital(r)?
a) 2%per annum
b) 4% per annum
c) 8%per annum
d) 16%per annum
33,550 = 5,000 x cumulative 10 year discount factor at the cost of capital (CDF)
CDF = 33,550/5,000 = 6.71
So look at your 10 year annuity/cumulative d/c factors until you find 6.71 and read off the discount rate.
This is so fascinating.
hello Open tuition ,
Can you help me with these questions please?
1. After allowing for inflation, revenue in the first year following the investment is
expected to be £25 billion. Thereafter it is expected to grow at a real rate of 6%
per year, and the rate of inflation is expected to be 2½% per year.
a) how to calculate the sales revenues for 3 years?
If there were no inflation, the revenue would grow by 6% pa as you go from year 1 to 2, then 2 to 3.
Revenue for year 3 = £25B x 1.06 x 1.06 = £28.09B
On top of that there is also inflation: revenue must grow by 2.5% pa just to keep still in real terms.
Therefore the revenue (cash) expected for year 3 is:
28.00 x 1.025 x 1.025 = £29.51B