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Can anyone help me how to do Section B Question 1(a) of the revision mock exam? I can’t type out the question as it is too much.
The inflows are 120000 – 30000 = 90000 per year for 5 years, so multiply by the 5 year annuity factor to get the PV.
The scrap is 20000 in 5 years time, so multiply by the normal 5 years discount factor to get the PV.
The NPV is the total of these, less the initial cost of 300,000.
Sorry, what is the 3000 for again? i got out of the revision mock exam already. or perhaps you could post the full question here so I know what you’re trying to explain.
I can’t post the whole question here.
I assume you are referring to the question that asks for NPV?
(The software asks the questions in a random order (as with the real exam) and so if it not that question then you will have to say which).I did not mention 3000 in my answer.
Yes. It’s something about NPV. If im not mistaken, it’s Able Ltd I think. I got wrong for the whole thing because I do not know how to work out the workings as there’s too many figures like incremental cost, additional revenue, scrap value, initial cost etc. You did mention 3,000. You said “The inflows are 120000 – 30000 = 90000 per year for 5 years”.
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