- This topic has 5 replies, 3 voices, and was last updated 4 years ago by
John Moffat.
John Moffat.-
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shawen17
- Topics: 2
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Kindly help me out with this;
Able Ltd is considering a new project for which the ffg information is available
Initial cost $300000
Expected life 5yrs
Estimated scrap value $20000
Additional revenue from project $120,000 per year
Incremental cost of the project $30,000 per year
Cost of capital – 10%Calculate the net present value of the project
John Moffat
- Topics: 57
- Replies: 51183
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The cash flows are:
0 initial cost (300,000), so PV is (300,000)
1-5 net inflow of 120,000 – 30,000 = 90,000 p.a., so discount using the 5 year annuity factor at 10%
5 inflow of 20,000, so discount using the normal present value factor for 5 years at 10%.
I trust that you have watched my free lectures on interest and on investment appraisal? The lectures are a complete free course for Paper F2 and cover everything needed to be able to pass the exam well.
007julietta
- Topics: 3
- Replies: 7
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I had an exam yesterday and failed. One of the questions was to answer about NPV for 3 different projects X, Y, Z. NPV for X it was easy-discounted coefficients for 4 years using given amounts, for Y it was an annuity 1390 for 4 years and I had to calculate a payback period, and for Z it was needed to find NPV -it was perpetuity 390- same amount for every year and in brackets was initial amount (850). Cost of capital for all projects was 10%. So for Z I divided 850 by 0,1 and I ve got 8500, but I had to put amount to the nearest whole number in the empty field and near the field was 000. So I put 8.5 and I think it was my mistake. Could you advise what was the correct answer and how to put this amount correctly? Or I had to put 9?
r may be it was wrong formula absolutely? When I was training with mock from open tuition I ve got about 70%, but on the exam I had so different questions, even dont understand how to prepare now.John Moffat
- Topics: 57
- Replies: 51183
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If the initial amount was 850, then you don’t divide that by 0.1.
You divide the perpetuity of 390 by 0.1Had you watched all of my free lectures?
Did you buy a Revision Kit from one of the ACCA approved publishers and work through every question in it (as we stress throughout this website)?
If all you used was the mock exam on this website, then that is nothing like enough.
007julietta
- Topics: 3
- Replies: 7
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I bought a BPP set, and I tried Mock from opentuition. But I ve got some questions on exam which are absolutely different that in BPP like:how many degrees will be the angle if we will assume that all costs was a circle and for the first year costs was X. Such task wasnt
in Interactive text or mock. I didnt watch videos from open tuition. But I read whole text few times and resolved practical tasks. I have the revision kit from BPP, but there are two mocks from the year 2014John Moffat
- Topics: 57
- Replies: 51183
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You will always find questions in the exam that are different from ones you may have seen before (even though obviously they are testing the same things). The examiner deliberately tries to think of different ways of asking things to check that you really understand.
I suggest that you watch my free lectures in order to revise and check that you do understand everything. That you attempt the short online tests that we have after each lecture. That you attempt every question in your Revision Kit – if you have already practice every question in your BPP Kit then I suggest you buy one from Kaplan so that you will have different questions to try.
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