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Mock Exam MCQ's

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FM Exams › Mock Exam MCQ's

  • This topic has 3 replies, 2 voices, and was last updated 9 years ago by John Moffat.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • August 25, 2015 at 9:54 am #268449
    Mujtaba
    Member
    • Topics: 13
    • Replies: 10
    • ☆

    1.A company has agreed to lease a machine for a period of 8 years,with equal annual payments payable at the start of each year.
    The NPV of the agreement at a rate of 10% is $ 52000.

    What is the annual lease payment?

    1.$8208
    2.$13444
    3.$8862
    4.$9747
    Correct answer $8862
    please show working. Thanks

    August 25, 2015 at 10:44 am #268458
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54699
    • ☆☆☆☆☆

    The first payment is at time 0 (because it is payable at the start of the year). So if the amount is X, then the present value is X.

    It is followed by 7 more payments from time 1 to time 7. If the payment is X per year, then the PV is X x the 7 year annuity factory, which is X x 4.868

    So the total PV = X + 4.686X = 5.868X which must equal 52,000.

    So X = 52,000/5.868 = 8862

    August 26, 2015 at 4:12 pm #268645
    Mujtaba
    Member
    • Topics: 13
    • Replies: 10
    • ☆

    Thank you so much .

    August 27, 2015 at 8:28 am #268737
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54699
    • ☆☆☆☆☆

    You are welcome 🙂

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    Posts
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