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problem-kaplan mock q no-1 (asset replacement)

Forums › ACCA Forums › ACCA FM Financial Management Forums › problem-kaplan mock q no-1 (asset replacement)

  • This topic has 1 reply, 1 voice, and was last updated 13 years ago by AvatarFaisal.
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  • June 5, 2012 at 8:03 pm #53139
    AvatarFaisal
    Member
    • Topics: 4
    • Replies: 12
    • ☆

    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….

    June 5, 2012 at 8:22 pm #99263
    AvatarFaisal
    Member
    • Topics: 4
    • Replies: 12
    • ☆

    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.

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