DECEMBER 2008 question 2.3

lala2009
lala2009 Feels At HomeRegistered Posts: 95
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 Well-Known Registered Posts: 121
    are u talking about pev? pcr/ or dfs???
  • lala2009
    lala2009 Feels At Home Registered Posts: 95
    Ahhhh sorry PEV! :)
  • SandyHood
    SandyHood Font Of All Knowledge Registered, Moderator Posts: 2,034
    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
    [email protected]
    www.sandyhood.com
  • lala2009
    lala2009 Feels At Home Registered Posts: 95
    Thank you! :)
  • taskey
    taskey Font Of All Knowledge Registered Posts: 1,800
    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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