pev  discounted cash flow dec 2008 and june 2009 papers
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iss072
Registered Posts: 12 New contributor 🐸
Please can some one help me with this..
I don't remember studying this so I am trying to remember a way of doing this for the exam but I am getting confused
June 2009 exam
question 2.3
(a) asks you to calculate the discounted cash flow of a new machine plus ruinning costs spread from (0  5 years)
This seems quite striaght foward as the discount is worked out from 05 over the years minus the residul value
but....(b)
asks you to calculate the leasing costs  this is only discounted from (04) WHY?
Dec 2008 
Task 2.3
(a) seems straightfoward as above new machine and running costs over 5 years  discounted from year 05 BUT...
(b) asks you to calculate the labour saving  this answer misses out year 0  WHY? but then calculates the saving over year 1 5??
Thanks in advance if any one can shed some light on this
I don't remember studying this so I am trying to remember a way of doing this for the exam but I am getting confused
June 2009 exam
question 2.3
(a) asks you to calculate the discounted cash flow of a new machine plus ruinning costs spread from (0  5 years)
This seems quite striaght foward as the discount is worked out from 05 over the years minus the residul value
but....(b)
asks you to calculate the leasing costs  this is only discounted from (04) WHY?
Dec 2008 
Task 2.3
(a) seems straightfoward as above new machine and running costs over 5 years  discounted from year 05 BUT...
(b) asks you to calculate the labour saving  this answer misses out year 0  WHY? but then calculates the saving over year 1 5??
Thanks in advance if any one can shed some light on this
0
Comments

Hi
This is because b is paid in annually in advance therefore would only be over the 4 years.0 
Hi for Dec 2008, labour saving starts year one. It means that u can't start saving the same year of purchase u at least need a year to run the machine to start saving.0

thanks 0
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