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Investment Appraisal

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FM Exams › Investment Appraisal

  • This topic has 1 reply, 2 voices, and was last updated 4 years ago by John Moffat.
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  • December 27, 2020 at 6:08 am #600934
    adarsh1997
    Participant
    • Topics: 646
    • Replies: 282
    • ☆☆☆☆

    Hello John,

    There is a question in Kaplan Kit ( Armcliff co ) where we were required to calculate the ARR.
    And in it’s the average investment has been calculated by adding the book values of the asset over its life of 4 years and then dividing by 4. Why initial investment + scrap value / 2 was not used?

    Thanks

    December 27, 2020 at 11:16 am #600955
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54804
    • ☆☆☆☆☆

    I do not have the Kaplan Exam Kit (only the BPP Revision Kit). However the average capital employed should be calculated as initial investment + scrap value / 2.

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