FNPF; Annual compound interest

Terdoo

Practice assesment 4
Task 1.5 C

TheCost per unit of materila BP8 was £50.00 per kilogram on 1 jan X1 and £90.00 per kilogram on 1 Jan X7
using 1 Jan X1 as the base, the cost index for material BP8 as at 1 jan X7 is 180
the cost per unit has increased by 80% between Jan X1 and X7

This is equivalent to an annula compound interest rate of (10.29%)

how do they get the 10.29%
Please show calculation with workings?

Thanks:001_unsure:

SandyHood

If you haven't got a calculator that enables you to find x to the power of a value of your choice, then stop reading this now, and go and buy one.

Look at this link. The same question was asked in Nov 2012
http://forums.aat.org.uk/showthread.php?35865-Financial-performance-please-help&p=258037#post258037

Nps

Answered on pages 5-6 of this thread too (bottom of page 5 and top of page 6, question posted by Salih, answered by me).

http://forums.aat.org.uk/showthread.php?36041-Financial-performance-round-2!/page5

business_connex4u

There will not be a question on this in the exam. I asked my tutor and he checked with AAT and its a mistake in the CBA. It should not be there, not part of this subject.

Terdoo

Thank you all for your quick response:cool2:

SandyHood

Dear business_connex4u

I read your posting 16th April with interest.

There will not be a question on this in the exam. I asked my tutor and he checked with AAT and its a mistake in the CBA. It should not be there, not part of this subject.

I have heard from another source today that AAT consider it could be assessed in an FNPF exam. This seems to contradict your quote.
Until I am absolutely sure, my classes will continue to address counpounding and the annual compound interest equivalent of an increase in price over several years.

Sandy