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Net Present Value

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA MA – FIA FMA › Net Present Value

  • This topic has 1 reply, 2 voices, and was last updated 7 months ago by John Moffat.
Viewing 2 posts - 1 through 2 (of 2 total)
  • Author
    Posts
  • June 15, 2022 at 2:13 pm #658803
    nwanneikejibe
    Member
    • Topics: 2
    • Replies: 1
    • ☆

    Hi Mr. Maffot,

    Please I am having a hard time figuring this question out. Tried Annuity and Present value tables but I’m not getting the answer. Can you please explain the answer to me.

    Able Ltd is considering a new project, the details of which are attached.

    a) Calculate the Net Present Value of the project (to the nearest %).

    Information:
    Initial cost – $300,000
    Expected life – 5 years
    Estimated scrap value – $20,000
    Addition revenue from the project – $120,000 per year
    Incremental costs of the project • $30,000 per year

    Cost of capital – 10%

    June 15, 2022 at 8:50 pm #658813
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 51545
    • ☆☆☆☆☆

    The flows are as follows:

    Time 0 (300,000)
    1 to 5 90,000 per year. (120,000 – 30,000)
    6. 20,000

    Does that help?

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