AAT Advanced Synoptic practice assessment 2 - Task 5.b (Sept 2021 version)

irimescu_cris
irimescu_cris Registered Posts: 3
Hello

I am struggling with AAT Advanced Synoptic practice assessment 2 - Task 5.b (Sept 2021 version)
Can anyone help me with the calculations for Net Cash Flow?
The answer is
114090
111750
132360



Thank you

Comments

  • MomenaMalik
    MomenaMalik Registered Posts: 10
    Hi,

    I stuggled with this question aswell.

    Year 1 - 64,000 + 50,090 = 114,090 * 0.893 = 101,882 (rounded)
    Year 2 - 63,400 + 48,350 = 111,750 * 0.797 = 89,065 (rounded)
    Year 3 - 65,800 + 36,560 + 30,000(scrap value) = 132,360 * 0.712 = 94,240 (rounded)

    Net Present Value is then = -165,000 + 101,882 + 89,065 + 132,360 = 120,187
  • MomenaMalik
    MomenaMalik Registered Posts: 10
    Sorry the last line I accidently included the wrong figure. I have corrected it below:

    Net Present Value is then = -165,000 + 101,882 + 89,065 +94,240= 120,187
  • irimescu_cris
    irimescu_cris Registered Posts: 3
    Thank you very much!
  • Pian32
    Pian32 MAAT Posts: 448
    Momena has the correct values but I just want to add the reason behind it.

    Cash flows are only looking at the actual cash transfers.

    When you have depreciation there is no cash changing hands as such you need to add back the depreciation that has been taken to make the P&L.

    This would also apply to sales of fixed assets, in the P&L you'll show the overall profit/loss not the cash flow. You would remove the profit/loss from selling the asset and add in the actual sale amount of the asset.

    Hopefully this will help with similar questions in the future.
    AAT Level 4, MAAT
    ACCA in progress
    F4- Passed Aug 2020
    F5- Passed Dec 2020
    F6- Passed Sep 2020
    F7- Passed June 2021
    F8 - Planned Sep 2021
    F9 - Passed June 2021
  • MomenaMalik
    MomenaMalik Registered Posts: 10
    Thank-you Pian, for the reason. I was abit confused to why it was but I figured it out in the end.
  • irimescu_cris
    irimescu_cris Registered Posts: 3
    Thank you
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