• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
Free ACCA & CIMA online courses from OpenTuition

Free ACCA & CIMA online courses from OpenTuition

Free Notes, Lectures, Tests and Forums for ACCA and CIMA exams

  • ACCA
  • CIMA
  • FIA
  • OBU
  • Books
  • Forums
  • Search
  • Register
  • Login
  • ACCA Forums
  • Ask ACCA Tutor
  • CIMA Forums
  • Ask CIMA Tutor
  • FIA
  • OBU
  • Buy/Sell Books
  • All Forums
  • Latest Topics

Congratulations to Jamil from Pakistan and Jeeva from Malaysia - Global Prize winners!
see all ACCA December 2022 Genius Hunt Competition winners >>

Specially for OpenTuition students: 20% off BPP Books for ACCA & CIMA exams – Get your BPP Discount Code >>

NPV-Dec 2007 Q2 a

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FM Exams › NPV-Dec 2007 Q2 a

  • This topic has 5 replies, 2 voices, and was last updated 7 years ago by John Moffat.
Viewing 6 posts - 1 through 6 (of 6 total)
  • Author
    Posts
  • November 26, 2015 at 5:58 am #285342
    yushanshan
    Member
    • Topics: 84
    • Replies: 70
    • ☆☆

    Although I am able to get NPV-78 in Dec 2007 Q2 a, but I have problem understanding the explanation from” However ,demand becomes greater than production capacity in the 4th year of operation and so further investment in new machinery may be needed after three years…” to the end.
    The question says “existing production capacity is limited to 1 million…”, So I thought every year demand become greater than production capacity. I just wonder the reason Why I have such a crazy idea:(

    November 26, 2015 at 6:22 am #285344
    yushanshan
    Member
    • Topics: 84
    • Replies: 70
    • ☆☆

    ( Q2 b IRR )I have problem understanding the solution ” However , the appraisal suffers from the limitations discussed in connection with NPV a ” .

    November 26, 2015 at 9:48 am #285399
    John Moffat
    Keymaster
    • Topics: 56
    • Replies: 51563
    • ☆☆☆☆☆

    Demand is greater than existing production capacity, which is precisely why they are buying a new machine!!
    If they buy the new machine then it is only in the 4th year that demand is greater than the new total capacity.

    November 26, 2015 at 9:51 am #285400
    John Moffat
    Keymaster
    • Topics: 56
    • Replies: 51563
    • ☆☆☆☆☆

    I am not sure I understand your second question.

    In the examiners answer to part (a), in the two paragraphs below the calculation of the NPV he has stated the limitations of what we have done.

    In his answer to part (b) he simply says that the same limitations apply to the IRR.

    November 26, 2015 at 10:32 am #285422
    yushanshan
    Member
    • Topics: 84
    • Replies: 70
    • ☆☆

    Thanks, I got it.

    November 26, 2015 at 11:29 am #285438
    John Moffat
    Keymaster
    • Topics: 56
    • Replies: 51563
    • ☆☆☆☆☆

    You are welcome 🙂

  • Author
    Posts
Viewing 6 posts - 1 through 6 (of 6 total)
  • You must be logged in to reply to this topic.
Log In

Primary Sidebar

ACCA News:

 

ACCA My Exam Performance for non-variant Applied Skills exams is available NOW

NEW! Download the ACCA Pass Guide

FREE Verifiable CPD for ACCA Members

ACCA mock exams and debrief videos

ACCA Options:  “Read the Mind of the Marker” articles

Subscribe to ACCA’s Student Accountant Direct

Donate

If you have benefited from OpenTuition please donate.

ACCA CBE 2023 Exams

Instant Poll * How was your exam, and what was the result?

BT CBE exam was.. | MA CBE exam was..
FA CBE exam was.. | LW CBE exam was..

Specially for OpenTuition students

20% off BPP Books

Get BPP Discount Code

Latest comments

  • Amalsudheesh on FA Chapter 6 Questions Depreciation
  • Ravendra Arjune on FA Chapter 22 Questions Group Accounts The Consolidated Statement of Financial Position (1)
  • Ken Garrett on The Nature of Performance Management – ACCA Advanced Performance Management (APM)
  • Mustafy on Objective of financial reporting – ACCA Financial Reporting (FR)
  • John Moffat on IAS 16 Property, Plant and Equipment – ACCA Financial Accounting (FA) lectures

Copyright © 2023 · Support · Contact · Advertising · OpenLicense · About · Sitemap · Comments · Log in


We use cookies to show you relevant advertising, find out more: Privacy Policy · Cookie Policy