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Melplash bpp investment appraisal

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FM Exams › Melplash bpp investment appraisal

  • This topic has 1 reply, 2 voices, and was last updated 1 year ago by IAW3005.
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  • May 2, 2024 at 7:20 am #704807
    sabitha
    Participant
    • Topics: 19
    • Replies: 8
    • ☆

    Sir in this question while calculating roce we have deducted 30m scrap value from the forth year pv of the cash flow what is the reason behind it
    Can you explain sir

    May 2, 2024 at 4:43 pm #704842
    IAW3005
    Moderator
    • Topics: 4
    • Replies: 1589
    • ☆☆☆☆☆

    You must calculate an average of the capital employed
    So the investment is 220 and the rv (scrap) is 30
    They are both forms of capital to the project – both as an asset
    That is 250/2
    Beccause there are two cashflows
    That makes 125

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