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Hi, watching the lectures, referring to notes. Tried an online test question:
A business is contemplating investing in a new project with a lifespan of three years and a capital cost of
$100,000. The expected net cash flows from the project are as follows:
Year 1 $35,000
Year 2 $50,000
Year 3 $40,000
The cost of capital to the business is 10%
The net present value of the project is: $I got it to $3192.55, using an online tool to check it came to $3193.09
The actual answer given in the test as correct was
3155, 3150, 3159, 3157, 3153, 3152, 3158, 3160, 3156, 3154, 3151I have found this question in a couple of different places, with this same answer, I have searched through notes and lectures but cannot find an explanation for the 11 numbers, Would you expect a single figure, or does the row make sense. To give some context, in other examples i have found, it is multiple choice, but the multiple answers take the same format – 11 sets of numbers.
This seems very odd. I can understand why slightly different answers may exist depending upon method used to obtain answer and potential rounding differences. I can’t understand how multiple answers exist.
Someone on one of the ACCA subject threads asked about best method to use to find NPV part way through the following thread-
https://opentuition.com/topic/annuity-and-present-value-table-3/
Not sure how much use above thread will be to you as I personally can’t understand how multiple answers of nature you describe exist. Hopefully some can shed some light on your question. Welcome to the Opentuition forums.
Well I found it useful to read through, I think either the question is missing something or the answers given do not correspond. Thank you mrjonbain
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