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

irimescu_cris
irimescu_cris Registered Posts: 3 New contributor 🐸
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: 11
    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: 11
    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 New contributor 🐸
    Thank you very much!
  • Pian32
    Pian32 Registered Posts: 474 Dedicated contributor 🦉
    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
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  • MomenaMalik
    MomenaMalik Registered Posts: 11
    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 New contributor 🐸
    Thank you
  • PhilJRoo76
    PhilJRoo76 Registered Posts: 30 Regular contributor ⭐
    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.
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