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Hello sir,
Im not able to calculate the first three questions of the section B from the opentuition mock exam F2 …. sir can you please explain in detail those three question … Section B question number 1 ( a,b and c )
Thank you
Have you watched the free lectures on investment appraisal?
If you have then you will have to be more specific as to what your problem is with these three questions (because you should find them a pretty simple application of what I go through in the lectures).
For parts (a) and (c), the cash flows are an initial outflow of 300,000, followed by a new inflow of 120,000 – 30,000 = 90,000 a year for 5 years, and then an inflow of 20,000 in 5 years time.
For part (b), the average profit per year will be 90,000 less the depreciation of 56,000 per year. The average investment is (300,000 + 20,000) / 2Thanks alot for the answer sir… But in part b how did you calculate the depriciation of 56000 ??
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