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

20% off ACCA & CIMA Books

OpenTuition recommends the new interactive BPP books for March and June 2025 exams.
Get your discount code >>

kaplan kit 89, why have they used nominal approach?

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FM Exams › kaplan kit 89, why have they used nominal approach?

  • This topic has 1 reply, 2 voices, and was last updated 4 years ago by John Moffat.
Viewing 2 posts - 1 through 2 (of 2 total)
  • Author
    Posts
  • March 2, 2021 at 6:12 am #612508
    draiells
    Member
    • Topics: 123
    • Replies: 141
    • ☆☆☆

    Hello can you help me point out where is it indicated that we use nominal approach as the answer in kaplan has done wo the following question:

    ”Spotty Ltd plans to purchase a machine costing $18,000 to save labour costs. Labour
    savings would be $9,000 in the first year and labour rates in the second year will increase
    by 10%. The estimated average annual rate of inflation is 8% and the company’s real cost of
    capital is estimated at 12%. The machine has a two year life with an estimated actual
    salvage value of £5,000 receivable at the end of year 2. All cash flows occur at the year end.
    What is the negative NPV (to the nearest $10) of the proposed investment? ”

    March 2, 2021 at 9:25 am #612559
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54674
    • ☆☆☆☆☆

    We always discount the nominal cash flows at the nominal cost of capital unless the question specifically says to do differently.

  • Author
    Posts
Viewing 2 posts - 1 through 2 (of 2 total)
  • You must be logged in to reply to this topic.
Log In

Primary Sidebar

Donate
If you have benefited from our materials, please donate

ACCA News:

ACCA My Exam Performance for non-variant

Applied Skills exams is available NOW

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

Subscribe to ACCA’s Student Accountant Direct

ACCA CBE 2025 Exams

How was your exam, and what was the exam result?

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

Donate

If you have benefited from OpenTuition please donate.

PQ Magazine

Latest Comments

  • kamo7293 on Group SFP – FV adjustments – ACCA Financial Reporting (FR)
  • kamo7293 on Group SFP – NCA PUPs – ACCA Financial Reporting (FR)
  • fathi on ACCA Flashcards
  • kamo7293 on Group SFP – Example (PUPs) – ACCA Financial Reporting (FR)
  • kamo7293 on Group SFP – intra group and cash in transit – ACCA Financial Reporting (FR)

Copyright © 2025 · Support · Contact · Advertising · OpenLicense · About · Sitemap · Comments · Log in