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I think there were different tests, I had to calculate NPV without tax, without tad, without inflation, just with sales, variable costs and attributable to project fixed costs, initial investment refundable at the end of investment period and cost of machine with residual value, second question to that was to calculate sensitivity to sales volume.
What do you mean by initial investment refundable? I had the same question. I didnt see that anywhere. There was surely residual value. There was no tad but was tax in arrears
The question stated that you had a machine costing $400,000 with residual value in year four don’t remember now if it was 100 or thereabouts and it also stated that investment required initial investment of $75000 that will be recovered in full in year 4. In my question there was definitely no tax in arrears, it actually stated ignore taxation. Discount factor 12%
I sat my exam in the morning. The nvp was calculated on new investment where sales were estimated for four years and was meant to fully stop in year 4.
I did have a similar npv question in section a or b where there was tax payable in arrears.I feel we had different papers mate. Lets hope all of us make it through…. Best of luck
It had to do something with netting external or imperfect hedge something. I chose that option coz others looked wrong to me
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