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

irimescu_cris

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

MomenaMalik

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

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

Thank you very much!

Pian32

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.

MomenaMalik

Thank-you Pian, for the reason. I was abit confused to why it was but I figured it out in the end.

irimescu_cris

Thank you

PhilJRoo76

Thanks for all the answers in the comments section, helpful. I'm sitting my synoptics this coming Thursday (11th). Just been looking over the AVBK questions this afternoon.