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NPV

Forums › ACCA Forums › ACCA MA Management Accounting Forums › NPV

  • This topic has 5 replies, 2 voices, and was last updated 3 years ago by John Moffat.
Viewing 6 posts - 1 through 6 (of 6 total)
  • Author
    Posts
  • April 13, 2022 at 7:53 pm #653261
    sarbrina
    Participant
    • Topics: 57
    • Replies: 78
    • ☆☆

    Hi Mr. Maffot. I’m unable to solve this question. Please help me understand how to solve this question.

    Q.) Investment is possible in one or more of three projects – expected life 4 years.

    a b c
    $ $ $
    outlay 10000 7000 1250
    expected returns
    (t1 – t4)
    4000 2500 325
    The firm can borrow the finance at 10% pa.

    Which project(s) should be undertaken?

    a.) A only
    b.) A and B
    c.) A and C
    d.) A and B and C

    April 14, 2022 at 7:27 am #653279
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54702
    • ☆☆☆☆☆

    In future you must ask in the Ask the Tutor Forum if you want me to answer. This forum is for students to help each other.

    In the absence of any other information, they will invest in all projects that give a positive NPV. Therefore you need to calculate the NPV for each of the projects.

    April 16, 2022 at 12:53 pm #653433
    sarbrina
    Participant
    • Topics: 57
    • Replies: 78
    • ☆☆

    Sorry Mr. Maffot, I thought this was the tutors forum. And i understand the question requires you to calculate the NPV, but i do not understand how to do it. Please explain how to arrive at the answer.
    Thanks.

    April 16, 2022 at 2:27 pm #653437
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54702
    • ☆☆☆☆☆

    I explain how to calculate the present value of an annuity starting at a later date (in this case starting at time 11) in my free lectures on investment appraisal.

    April 17, 2022 at 12:19 pm #653477
    sarbrina
    Participant
    • Topics: 57
    • Replies: 78
    • ☆☆

    Thank you sir

    April 17, 2022 at 2:30 pm #653487
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54702
    • ☆☆☆☆☆

    You are welcome 🙂

  • Author
    Posts
Viewing 6 posts - 1 through 6 (of 6 total)
  • The topic ‘NPV’ is closed to new replies.

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