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Good evening, sir.
Can I have the solution of MA revision mock exam section B Q1’s solution?
I have been doing 2 hours on these questions but still cant solve the problem.You can find the answer here:
https://opentuition.com/topic/mock-exam-section-b/THANKS… I have take a look on the explanation but I still confuse on part (a). Do you mind to do the solution for me?
Outflow at time 0: (300,000)
Net inflow of 90,000 per year (120,000 – 30,000) for 5 years, so multiply 90,000 by the 5 year annuity discount factor at 10%, which gives 90,000 x 3.791 = 341,190
Inflow at time 5 of 20,000, so multiply 20,000 by the present value factor for 5 years at 10%, which gives 20,000 x 0.621 = 12,420
Therefore the NPV = 341,190 + 12,420 – 300,000 = $53,610
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