Why are you attempting a question for which you do not have an answer? You should be using a Revision Kit from one of the ACCA Approved Publishers – they have answers!!
The NRV is 7 – 0.5 = $6.50, and therefore any inventory will be values at $5.
This is all explained in my free lectures on the valuation of inventory. The lectures are a complete free course for Paper FA and cover everything needed to be able to pass the exam well.