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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › q.74 (bpp revision kit_Blipton international_12/08, amended)
Dear tutor,
in part a) we need to calculate CF of return phase, where it is necessary to calculate terminal value of hotel. In answer this terminal value is calculated like this: 6,200*1.08^5 -1,200. I can’t understand why we shouldn’t adjust 1,200 (charge for repairs and renewals) by UK inflation rate.
It should have been adjusted by the UK inflation of 2.5%.
If you look at the examiners own answer, he has adjusted it.
