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Dear John,
In part a, the answer of estimating NPV it was used combined of growth and annuity in a formula. I have tried to calculate separately but I could not get the same answer. Could
you please kindly help me to break down into formula.Thank you very much!
I don’t really understand what you are asking, and why you wanted to calculate separately.
The formula is given in the question and you are expected therefore to use it!!
It is actually easy to derive. It is the normal annuity formula that is given at the top of the annuity tables in the exam, using the real discount rate which is given by
1 + r = (1 + i) / (1 + g)Thank you John, i m sorry because my lecture’notes do not put this formular on the question part. So i was confused. I saw the this question on acca webstie and the formula was given.
You are welcome, and no problem 🙂
I assume that you are OK with it now?
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