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Forums › ACCA Forums › ACCA FM Financial Management Forums › problem-kaplan mock q no-1 (asset replacement)
qs:
the cost of a new machine would be $450,000 payable immediately.
Maintenance cost would be payable at the end of each year of the project.
The first maintenance payment for the new machine is £25000 and will rise by 7.5% per year.
Ans:
maintenance cost supposed to be the cash out flow (25,000) such as purchase of new machine (450,000) and all together the npv will show the negative figure.
but the kaplan ans showing maintenance cost as a cash inflow and the total npv is positive !!!!! how it can be….
admin pls delete this post, i was confused when saw the ans but now i can see they also showed that as a cash outflow. thanx.