DECEMBER 2008 question 2.3

lala2009
lala2009 Registered Posts: 95 Regular contributor ⭐
Ok I have read the chief assessor's report for this exam and I must admit I have no idea how to answer this question - "unforgivable"!!!

I have looked at the model answer but still struggling - is anyone able to give me a step by step answer pleeeeaase?

:crying:

Comments

  • wolfe
    wolfe Registered Posts: 121 Dedicated contributor 🦉
    are u talking about pev? pcr/ or dfs???
  • lala2009
    lala2009 Registered Posts: 95 Regular contributor ⭐
    Ahhhh sorry PEV! :)
  • SandyHood
    SandyHood Registered, Moderator Posts: 2,034 mod
    I think this is a life cycle costing question

    If so:
    1. Find the net cash flow each year
    2. Find the appropriate PV (or discount) factor for each year
    3. Multiply the net cash flow and the PV factor on a year by year basis to produce the discounted cash flowfor each year
    4. Add up all the discounted cash flows to find the net present value
    5. If the net present value is positive that means the decision to go ahead with the project will add value to the business (as soon as the decision is made).
    Sandy
    sandy@sandyhood.com
    www.sandyhood.com
  • lala2009
    lala2009 Registered Posts: 95 Regular contributor ⭐
    Thank you! :)
  • taskey
    taskey Registered Posts: 1,800 Beyond epic contributor 🧙‍♂️
    SandyHood wrote: »
    I think this is a life cycle costing question

    If so:
    1. Find the net cash flow each year

    sorry have looked at it again - still clear as mud but now see how the answer was found

    thanks anyway

    tracy
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