Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › Fuelit BPP Question 83
- This topic has 3 replies, 2 voices, and was last updated 10 years ago by John Moffat.
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- November 16, 2013 at 5:09 am #146237
dear Mr Moffat,
Looking at the flow of the information in this Question, I concluded that if generation of electricity is starting in 3 year’s time, then there must be cash-flows at the end of year 3 , which will make the calculation starts from year 3 .I am surprised to note that BPP is starting from year 4…Please shed more light on thisNovember 16, 2013 at 11:13 am #1462980 is ‘now’ (the start of the first year)
1 is not a year – it is a point in time one year from now. So 1 is the end of the first year/start of the second year (we are not bothered about plus or minus 1 day when we come to discount)We always assume that operating flows occur at the ends of years (unless told differently).
So….in Fuelit, generation starts at time 3 (3 years from now). The first cash flows will occur at the end of the year, which is 4 years from now.
November 17, 2013 at 4:23 am #146404ok Thanks very much
November 17, 2013 at 7:45 am #146411You are welcome 🙂
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