- This topic has 1 reply, 2 voices, and was last updated 5 years ago by John Moffat.
Viewing 2 posts - 1 through 2 (of 2 total)
Viewing 2 posts - 1 through 2 (of 2 total)
- You must be logged in to reply to this topic.
Specially for OpenTuition students: 20% off BPP Books for ACCA & CIMA exams – Get your BPP Discount Code >>
Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FM Exams › Inflation in NPV questions
If a question states that Selling Price will have inflation every year, do you lose marks for any rounding errors?
What I mean is, if price is $20 and inflation is 4%, you can work out the “per unit price” adjusted for inflation per year of:
Y1: $20.80
Y2: $21.63
Y3: $22.50 etc
then multiply those the number of units per year to get the revenue for that year.
Or alternative (as I do) is to multiply the uninflated price (in this case $20) by the number of units and then adjust the “real total revenue” for inflation.
Usually these give a slightly different answer due to “per unit” prices being rounded to the nearest dollar + cent. Will you lose marks for picking one method over the other? Example questions I’ve seen seem to inflate the price first to nearest $+cent.
Similarly, for the NPV calculation, would you lose marks for filling in your pro forma to the nearest ‘000? As I’ve noticed in the practice exams that I’ve been doing, have been done with full figures, which obviously again means answers slightly differ.
From watching your lectures I think I remember you saying you still get full marks for doing it to the nearest ‘000 but I just wanted to re-affirm that I remember correctly and that this was still the case.
No – you will not lose marks for rounding (and do it to the nearest thousand anyway unless the question tells you to do different) 🙂