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revision mock question

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA MA – FIA FMA › revision mock question

  • This topic has 5 replies, 2 voices, and was last updated 8 years ago by John Moffat.
Viewing 6 posts - 1 through 6 (of 6 total)
  • Author
    Posts
  • October 24, 2016 at 3:17 pm #345851
    beierleee
    Member
    • Topics: 1
    • Replies: 2
    • ☆

    Hi, do you mind explaining the first MTQ in the revision mock paper relating to interest? there’s no solution in the review. thank you

    October 24, 2016 at 5:35 pm #345887
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54699
    • ☆☆☆☆☆

    You will have to be more specific!

    Which mock paper are you asking about?

    If it is the one that we have on this website, then the MCQ’s are selected at random from a large bank of questions, so I do not not know which you got first – you will need to give some information about the question.

    October 25, 2016 at 2:25 am #345911
    beierleee
    Member
    • Topics: 1
    • Replies: 2
    • ☆

    Sorry for not the being specific ! Here’s the question :
    Abel ltd is considering a new investment with the following information :

    Initialcost – 300000
    Expected life – 5 years
    Estimated scrap value – 20000
    additional revenue per year – 120000
    Incremental cost per year – 30000
    Cost of capital- 10%

    A) find the NPV of the project

    October 25, 2016 at 7:57 am #345931
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54699
    • ☆☆☆☆☆

    The net cash inflow is 120,000 – 30,000 = 90,000 per year for 5 years, so discount this using the 5 year annuity discount factor at 10%.

    In addition there is a receipt of 20,000 in 5 year time, so discount this using the ordinary present value factor for 5 years at 10%.

    Add the two together, and subtract the initial cost of $300,000.

    Have you watched my free lectures on investment appraisal? The lectures are a complete free course for Paper F2 and cover everything needed to be able to pass the exam well.

    October 25, 2016 at 2:03 pm #345962
    beierleee
    Member
    • Topics: 1
    • Replies: 2
    • ☆

    Yeah I did. Thank you

    October 25, 2016 at 3:56 pm #345987
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54699
    • ☆☆☆☆☆

    You are welcome 🙂

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    Posts
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