• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
Free ACCA & CIMA online courses from OpenTuition

Free ACCA & CIMA online courses from OpenTuition

Free Notes, Lectures, Tests and Forums for ACCA and CIMA exams

  • ACCA
  • CIMA
  • FIA
  • OBU
  • Books
  • Forums
  • Search
  • Register
  • Login
  • ACCA Forums
  • Ask ACCA Tutor
  • CIMA Forums
  • Ask CIMA Tutor
  • FIA
  • OBU
  • Buy/Sell Books
  • All Forums
  • Latest Topics

PQ Awards Nominations

Please help us to win one of the PQ Magazine awards and send in the voting form >>
You can nominate us in any or all of the following categories: Online College of the Year, Study Resource of the Year, Private Sector Lecturer of the Year, and Accountancy Personality of the Year.

Specially for OpenTuition students: 20% off BPP Books for ACCA & CIMA exams – Get your BPP Discount Code >>

Investment appraisal

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

  • This topic has 3 replies, 2 voices, and was last updated 1 year ago by John Moffat.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • August 26, 2021 at 2:26 am #632946
    Nikitagarwal
    Participant
    • Topics: 153
    • Replies: 146
    • ☆☆☆

    Hi Sir,
    Hope you are doing well!
    Ques – It is now felt that the final scrap value of the machines depends on two factors:
    whether or not a new supplier enters the market (which would reduce the likely
    scrap value) and the strength of the dollar against other currencies (since sales of
    used machines will be made abroad and invoiced in the foreign currency). Adverse
    effects will each reduce the scrap value by 10% of the figure used in the investment
    appraisal. The relevant probabilities are as follows.
    New supplier Probability Strong $ Probability
    Yes 0.4 Yes 0.3
    No 0.6 No 0.7

    What is now the expected value of the scrap proceeds?

    SIr , I need to understand the workings behind it ?

    August 26, 2021 at 7:47 am #632981
    John Moffat
    Keymaster
    • Topics: 56
    • Replies: 51585
    • ☆☆☆☆☆

    You have not said what the final scrap value was initially expect to be, and neither have you written which currency they work in, so I cannot calculate the expected scrap value.

    However you need to list the four possible outcomes, and for each of them the scrap value and the probability.

    The probability of new supplier and strong $ is 0.4 x 0.3 = 0.12
    The probability of new supplier and not strong $ is 0.4 x 0.7 = 0.28
    The probability of not new supplier and strong $ is 0.6 x 0.3 = 0.18
    The probability of not new supplier and not strong $ is 0.6 x 0.7 = 0.42

    For each possibility multiply the outcome by the probability, and then add them up to get the expected value (as you will remember from Paper PM).

    August 26, 2021 at 3:47 pm #633042
    Nikitagarwal
    Participant
    • Topics: 153
    • Replies: 146
    • ☆☆☆

    oohh I get it now…. I got it from above , thanks

    August 26, 2021 at 3:52 pm #633046
    John Moffat
    Keymaster
    • Topics: 56
    • Replies: 51585
    • ☆☆☆☆☆

    You are welcome

  • Author
    Posts
Viewing 4 posts - 1 through 4 (of 4 total)
  • You must be logged in to reply to this topic.
Log In

Primary Sidebar

ACCA News:

 

ACCA My Exam Performance for non-variant Applied Skills exams is available NOW

NEW! Download the ACCA Pass Guide

FREE Verifiable CPD for ACCA Members

ACCA mock exams and debrief videos

ACCA Options:  “Read the Mind of the Marker” articles

Subscribe to ACCA’s Student Accountant Direct

Donate

If you have benefited from OpenTuition please donate.

ACCA CBE 2023 Exams

Instant Poll * How was your exam, and what was the result?

BT CBE exam was.. | MA CBE exam was..
FA CBE exam was.. | LW CBE exam was..

Specially for OpenTuition students

20% off BPP Books

Get BPP Discount Code

Latest comments

  • John Moffat on Activity Based Costing part 1 – ACCA Performance Management (PM)
  • John Moffat on Introduction to Financial Accounting – ACCA Financial Accounting (FA) lectures
  • tobimillz100 on Activity Based Costing part 1 – ACCA Performance Management (PM)
  • omarcham on IASB Conceptual Framework – Introduction – ACCA Financial Reporting (FR)
  • Iby2012 on Introduction to Financial Accounting – ACCA Financial Accounting (FA) lectures

Copyright © 2023 · Support · Contact · Advertising · OpenLicense · About · Sitemap · Comments · Log in


We use cookies to show you relevant advertising, find out more: Privacy Policy · Cookie Policy