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Did anybody else leave the £100000 disposal out of the final question?

HunnieHunnie Feels At HomeRegistered Posts: 41
I did not include this as the question stated that the contract would either be renewed OR disposed after 3 years....

Comments

  • acc1077acc1077 Well-Known Registered Posts: 138
    I left it in and am now very concerned about this question,
  • EssexgalEssexgal Feels At Home Registered Posts: 42
    Yes I did, I was going to add on to sales like quite a few others did but didnt in the end and made the calculations without it.

    I think this is wrong but as long as the calculations are correct I dont think we will lose many marks for that... hopefully
  • westendladwestendlad Feels At Home Registered Posts: 30
    I left it out.

    I think my NPV was +79 or something
  • lucialucia Just Joined Registered Posts: 2
    Hi, I did not add the £100,000 in as it did not state if it would be disposed or the contract renewed. Unless you def know it was being disposed of. By looking at people's replies on the pther threads i think everyone is 50/5 on this question. Maybe they will mark both as correct as it could have been worded better.
  • HunnieHunnie Feels At Home Registered Posts: 41
    Essexgal wrote: »
    Yes I did, I was going to add on to sales like quite a few others did but didnt in the end and made the calculations without it.

    I think this is wrong but as long as the calculations are correct I dont think we will lose many marks for that... hopefully[/QUO

    Hope not...I hope the rest of the paper is ok then it won't matter if the NPV is right or wrong!!
  • HunnieHunnie Feels At Home Registered Posts: 41
    lucia wrote: »
    Hi, I did not add the £100,000 in as it did not state if it would be disposed or the contract renewed. Unless you def know it was being disposed of. By looking at people's replies on the pther threads i think everyone is 50/5 on this question. Maybe they will mark both as correct as it could have been worded better.

    Finally, i've found somebody who thinks the same as me! I left it out because they said the contract will be renewed or disposed...it never actually stated which one so surely the £100000 cannot be included until that point :)
  • DillDill Settling In Nicely Registered Posts: 23
    I did add it. It was in the projections in the table on the bottom of the left hand page in the data so I think it must have been included.

    Either way, it's just one mistake.
  • EssexgalEssexgal Feels At Home Registered Posts: 42
    westendlad wrote: »
    I left it out.

    I think my NPV was +79 or something

    I done that too
  • jeskimosdadjeskimosdad New Member Registered Posts: 11
    Hi everyone. I reckon you have to include it because you're always working on a worst case scenario. if you assume the contract will be renewed you'd have to go beyond year 3 and continue with the estimated cashflows. good luck anyway, don't think it'll be a huge blow if you haven't included it.:001_unsure:
  • acc1077acc1077 Well-Known Registered Posts: 138
    if thats the only mistake - can you still pass? i'm getting really worried
  • DillDill Settling In Nicely Registered Posts: 23
    Yeah this is right Jeski.

    You're working out how good the contract is -- not how future contracts will perform.

    Anyway, either way, I'm not worried.
  • westendladwestendlad Feels At Home Registered Posts: 30
    Essexgal wrote: »
    I done that too

    I'm sure it was 79.

    The annoying thing is that you practice all of these things, and then when you have done the exam are wondering if you've done it right.
  • DillDill Settling In Nicely Registered Posts: 23
    In fact, I'm thinking about when you have to factor depreciation into a calculation, you must always add the residual value to the final years income.

    So I'm now pretty sure that you have to add that 100k.

    In essence, it's the difference between 9/10 and 10/10. Hardly worrying guys.
  • EssexgalEssexgal Feels At Home Registered Posts: 42
    Yes totally agree, but on a positive note I cant imagine we would fail if this was only error.
  • HunnieHunnie Feels At Home Registered Posts: 41
    Dill wrote: »
    In fact, I'm thinking about when you have to factor depreciation into a calculation, you must always add the residual value to the final years income.

    So I'm now pretty sure that you have to add that 100k.

    In essence, it's the difference between 9/10 and 10/10. Hardly worrying guys.

    Only if the contract isn't renewed though...
    The contract may continue, in which case the £100000 disposal would not happen. Badly worded question !
  • DillDill Settling In Nicely Registered Posts: 23
    I don't think you can assume it will be renewed -- but you're right it wasn't as clear as it should have been. Although all of the people in my group did add it.

    There shouldn't be any grey areas in these questions.
  • HunnieHunnie Feels At Home Registered Posts: 41
    Dill wrote: »
    I don't think you can assume it will be renewed -- but you're right it wasn't as clear as it should have been. Although all of the people in my group did add it.

    There shouldn't be any grey areas in these questions.

    I used those parts for my commercial factors...
    how likely it is that the contract wil be renewed and if not how achievable is the £100000 sale of disposal

    What did you put here? Normally the investment is the introduction of a new product so this was difficult to answer
  • DillDill Settling In Nicely Registered Posts: 23
    I also mentioned that you don't know if it will be renewed and this will affect the numbers. But ... meh who knows, we're simply gonna have to wait until the answers are put online in 2 months aren't we?
  • katiehkatieh Feels At Home Registered Posts: 25
    hi every1, i didn't add it and i got 79 something for npv, as did the majority in my group. we will just have to wait and see won't we. :001_smile:
  • LondonMattLondonMatt Experienced Mentor Registered Posts: 1,110
    If you included the disposal when calculating the third year, what would your answer be? 290 or 190 for the third year? I re-read my answer and I couldn't figure out how I got the answer I got? I don't know what I gave now - it was in that blur when almost every question I rechecked was wrong!! What were the sales revenue and the cost figures for the third year?
  • katiehkatieh Feels At Home Registered Posts: 25
    i didn't include the disposal and i got 190
  • LondonMattLondonMatt Experienced Mentor Registered Posts: 1,110
    So does anyone remember what the sales revenue and the cost figures for the third year were? I think I'd remember the total I gave if I had that info.
  • FlashbFlashb Just Joined Registered Posts: 4
    Intial Expenditure in Brackets

    Was the initial capex in brackets? I think it was (600).

    I added the Disposal as income and got quite a high NPV.
  • andrewtdkandrewtdk Well-Known Registered Posts: 150
    Yea i added the 100k aswell as i thought they were asking about the current contract and i felt that an extended contract was something that could possible happen in the future. Starting to wonder now though with so many people giving different answers
  • Caz1Caz1 Feels At Home Registered Posts: 44
    I got NPV of 70 something (I think) and a payback period of 1.9 years!! Really worried now about this question! Can't believe its so long until the answers are up on the site!
  • Sean of KentSean of Kent Just Joined Registered Posts: 3
    I agree with Hunnie and others that left the £100,000 out. At the time of producing the forecast we wouldn't know if the contract was to be extended or the kit disposed of, so I left it out. Hope this is right. :001_unsure:
  • jenz496jenz496 Feels At Home Registered Posts: 31
    I included it as a sort of residual value, i wasn't sure why it would be there if we weren't to include, and as the investment was a 3 year and no more, i assumed the contract would be 3 years and that was it.

    maybe a badly designed question.
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