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Sir,
I had a doubt on question no 26 of Kaplan Revision kit.Why have we taken incremental contribution and relevant cash flows while calculating NPV? We usually find out the costs and income relating to the individual machine and not incremental isnt it?
Also sir i have a doubt on question no 27 of Kaplan Revision kit. Why and how has he taken 318 and not 530 as a fixed cost? We havent been told the initial investment has been recorded as fixed cost.
Thanking you sir in advance for your help and support. 🙂I only have a BPP Revision kit, and so I cannot really help you unless the are past exam questions. If they are past exam questions then give the name and the exam date – then I will be able to find them and be able to help you.
Sir,
The exam question is of year 2007(dec attempt),here’s the link.Its question no 2 of the paper i.e Duo company(My first query of the question,NPV and relevant cash flows)
My 2nd doubt is of 2010 year(june attempt).here’s the link.
Its question no 3 of the paper i.e OKM company(2nd query of problem)
Thank you in advance for your help again sir.
Your first question:
Under the figures in the question giving the demand, the question says that the new machine would only be used for demand addition to the existing production capacity.
Your second question:
Note 5 of the question says the 200,000 of the fixed costs have been already incurred and are being recovered by an annual charge. There is therefore no future cash flow in relation to this 200,000.
Please in future don’t give links to questions – it is breaking copyright – just give the name of the question and the date of the exam.
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