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Mock Exam FMA/F2 paper

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA MA – FIA FMA › Mock Exam FMA/F2 paper

  • This topic has 2 replies, 2 voices, and was last updated 8 years ago by John Moffat.
Viewing 3 posts - 1 through 3 (of 3 total)
  • Author
    Posts
  • July 21, 2017 at 8:53 am #397888
    tanyanti
    Participant
    • Topics: 8
    • Replies: 11
    • ☆

    Good day John,

    I have attempted the mock exam question F2 on open tuition.

    But i could not get the answer for Section B, question 1(a) and question 1(b).

    Don’t mind to explain on how to get the answer 53610 for (1a) and 21 for (1b)?

    Thank you.

    July 21, 2017 at 3:30 pm #397954
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54757
    • ☆☆☆☆☆

    For question 1 (a) the cash flows are:

    0 (300,000)
    1-5 120,000 – 30,000 = 90.000 p.a.
    5 20,000

    Discounting the annuity using the 5 year annuity factor gives a PV of 341,190
    Discounting the scrap using the 5 year PV factor gives a PV of 12,420

    The NPV = 341,190 + 12,420 – 300,000 = 53,610

    July 21, 2017 at 3:33 pm #397956
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54757
    • ☆☆☆☆☆

    For question 1 (b):

    The total cash inflows from operations = 5 x 90,000 = 450,000
    The total depreciation = 300,000 – 20,000 = 280,000
    The total profit = 450,000 – 280,000 = 170,000
    The average profit per year = 170,000 / 5 = 34,000

    The average value of the machine = (300,000 + 20,000) / 2 = 160,000

    Therefore the ARR = 34,000 / 160,000 = 21.25%

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