• 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

Congratulations to Jamil from Pakistan and Jeeva from Malaysia - Global Prize winners!
see all ACCA December 2022 Genius Hunt Competition winners >>

Specially for OpenTuition students: 20% off BPP Books for ACCA & CIMA exams – Get your BPP 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 1 year 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: 51538
    • ☆☆☆☆☆

    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

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 Time Series Analysis – ACCA Management Accounting (MA)
  • John Moffat on The use of the target cost – ACCA Performance Management (PM)
  • tello18956 on CIMA BA2 Non-Financial Performance Measurement
  • 56v647e on ACCA AB Chapter 3 – An organisation’s stakeholders – Questions
  • SwissCheese on The use of the target cost – ACCA Performance Management (PM)

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