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, 3151
I 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.
CIMA Forums
The net present value of the project is?
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
You are welcome. If anyone has any other theories, hopefully they will share them on this thread.
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