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Hello,
I have a question about the March 2020 AFM exam. The question says that manufacturing and sales would commence immediately after being granted regulatory approval and it is expected that the regulatory approval would be granted in one year’s time.
How come all the sales and production appears in YR2 instead of YR1?
Thanks for your help!
Adrienn
Unless told otherwise we always assume that operating flows occur at the end of years.
If regulatory approval is given in 1 years time, then sales revenue and manufacturing costs will only occur in the year following the approval (i.e. the second year) and the flows will occur at the end of the second year i.e. time 2.
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