ECR Net Present Value answer

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any2002uk
any2002uk Registered Posts: 88 Regular contributor ⭐
in AAT Level 3 (Level 6 in Scotland)
Mine Net Present Value of Aircraft A is +379, B is +272

i advise aircraft B because of low NPV and more viable.

The reason for pick B because somewhre in the past exam paper said lower NVP is better than higher. i am not sure, please do tell me your view

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  • any2002uk
    any2002uk Registered Posts: 88 Regular contributor ⭐
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    hi
  • angie1
    angie1 Registered Posts: 29 Regular contributor ⭐
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    the npv question u asked, its the higher the better because its adding value to the company, if the question says net present cost then the lower the better, you have to read the question as to if it says value or cost, i hope this helps.
  • Pinchy
    Pinchy Registered Posts: 38 Regular contributor ⭐
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    Yeah angie1 is right I'm afraid - cost and value mean different things.
  • any2002uk
    any2002uk Registered Posts: 88 Regular contributor ⭐
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    i am surprise i emailed my tutor and she said it is same thing NVP and NPC!
    she never taught about NPCost! only NVP and said the best low so that is why i am confuse
  • Pinchy
    Pinchy Registered Posts: 38 Regular contributor ⭐
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    Net Present Cost is each discounted value per year PLUS the original capital.
    Net Present Value is each discounted value per year MINUS the original capital.
    I think!
    So if the NPV is higher then the company is valued at a higher level, hence that is a good thing.

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