• 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 >>

Project proposal

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA MA – FIA FMA › Project proposal

  • This topic has 3 replies, 2 voices, and was last updated 7 years ago by John Moffat.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • November 25, 2015 at 7:02 pm #285275
    samara182
    Member
    • Topics: 6
    • Replies: 6
    • ☆

    The following measures have been calculated to appraise a proposed project:
    The internal rate of return is 12%
    The return on capital employed is 16%
    The payback period is 4 years

    Which of the following statements is correct?

    A) the payback is less than 5 years so the project should go ahead
    B) the IRR is lower than the return on capital employed so the project should not go
    ahead
    C) the IRR is greater than the cost of capital so the project should go ahead
    D) The IRR is positive so the project should go ahead

    The given answer is C, but what I don’t understand is how did they conclude that the cost of capital is lower than the IRR? Which one of the given information tells us that?

    November 26, 2015 at 8:34 am #285370
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 51551
    • ☆☆☆☆☆

    Are you 100% certain that you have copied the question correctly?

    If you are then although you can definitely say that the answer is not A, B, or D, you could not say the C is necessarily correct (because you would need to be told the cost of capital).

    If you have copied it correctly then there is a mistake in whichever book you found it.

    November 26, 2015 at 12:49 pm #285454
    samara182
    Member
    • Topics: 6
    • Replies: 6
    • ☆

    Thank you very much for your answer. I copied it correctly so there must be a mistake.

    November 26, 2015 at 2:50 pm #285503
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 51551
    • ☆☆☆☆☆

    You are welcome 🙂

  • Author
    Posts
Viewing 4 posts - 1 through 4 (of 4 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

  • cBarsoum on The Stages of an Audit – Appointment – ACCA Audit and Assurance (AA)
  • John Moffat on Revaluation Reserve – ACCA Financial Accounting (FA) lectures
  • John Moffat on Revaluation Reserve – ACCA Financial Accounting (FA) lectures
  • CHICCO.J on ACCA AB Chapter 1 – The nature and structure of organisations – Questions
  • Joanne94 on Irrecoverable Debts and Allowances Example 3 – 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