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Dear Tutor,
I have noticed that when calculating NPV I get different result due to rounding. E.g. when calculating Sales revenue with inflation e.g. for year 2
units:53000
SP:20
Inflation: 4%My calculation: 53000x20x(1.04)2 = 1.146.496
In the answer the calculation is:
20x(1.04)2 =21,63
21,63×53000=1.146.390In my calculation I typed all the figures in my calculator at once. While in the answer there is a “2-step” calculation.
This difference will affect WC calculation as well as the NPV of the project.
Will I lose marks if I do it based on my calculation?
You do not lose marks for rounding (and in fact in NPV questions we normally work to the nearest 1,000 anyway).
In the MCQ’s you will always be asked for answers to the nearest 1,000 (so as to avoid rounding problems).
In the long-form questions in Section C of the exam, the marks are for the workings – not for the final answer – and so again rounding is not a problem.
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