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ROI ON PRE MOCK 22

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FM Exams › ROI ON PRE MOCK 22

  • This topic has 3 replies, 2 voices, and was last updated 8 months ago by John Moffat.
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  • June 3, 2022 at 10:25 am #657222
    Shi2004
    Participant
    • Topics: 79
    • Replies: 33
    • ☆☆

    A project has estimated Cf of $3000 per year with initial investment of $9000. Depreciation is straightline with no residual value and project has 6yr life. The target ROI is 28% and payback 2.5year. Roce is based on average investment.
    Under which appraisal method will the project be accepted??
    Do we take depreciation when calculating the average profit? And for the payback how do we know its and even CF and instead of doing cumulative we just calculate by 9000/3000??

    June 3, 2022 at 4:16 pm #657273
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 51545
    • ☆☆☆☆☆

    The profit is always calculated after depreciation.

    For the payback period, the question says that the cash flow is $3,000 per year. Therefore it takes 3 years to get back a total of $9,000.

    June 4, 2022 at 8:43 am #657316
    Shi2004
    Participant
    • Topics: 79
    • Replies: 33
    • ☆☆

    Okay sir thank you. Helps a lot!!

    June 4, 2022 at 9:29 am #657331
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 51545
    • ☆☆☆☆☆

    You are welcome.

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