ACCA - Association Of Chartered Certified Accountants
ACCA - Association Of Chartered Certified Accountants
ACCA - Association of Chartered Certified Accountants
Summary
Summary ACCA FINANCIAL MANAGEMENT F9 ALL FORMULAS AND COST OF EQUITY NOTES
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ACCA - Association of Chartered Certified Accountants
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ACCA - Association Of Chartered Certified Accountants
Book
ACCA F9 Financial Management
This document contains all formulas required for ACCA F9 FINANCIAL MANAGEMENT paper. cost of equity, investment appraisal, weighted average cost of finance, all complex topics are covered and explained. all formulas compiled in one place.
ACCA - Association of Chartered Certified Accountants
ACCA - Association of Chartered Certified Accountants
ACCA - Association of Chartered Certified Accountants
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Investment Appraisal
Saturday, March 26, 2022 6:51 PM
Accounting Rate of Return
IRR or DCF yield; Break-even cost of capital. Project to be accepted if IRR is greater than
the cost of capital.
PV of perpetuity = CF/r
Nominal cash flows (the actual expected cash flows at future prices, ie including inflationary increases)
should be discounted at a nominal discount rate, which is a rate relating to current market rates of
return. Real cash flows (cash flows in current prices) should be discounted at a real discount rate, which
is based on a nominal cost of capital that has been deflated by the general rate of inflation.
Perpetuity X
Discounted Payback
Consistent Cashflows
Effect of inflation and taxation in investment appraisal
FM F9 Page 1
,Effect of inflation and taxation in investment appraisal
Profitability Ratio = PV CFs/ Investment Cost
Project NPV at Year 1 NPV in Year 0 Value Loss in NPV
NPV in Year 0 Value = NPV at Year 1 x 0.909
Project Loss in NPV Investment Value Postponeability Index
Postponability Index = Loss in NPV/ Investment Value
After Tax Borrowing rate = Cost of Capital x (1-T)
Balancing Charge = Scrap Value x Tax Rate
Balancing Allowance = Purchase Value - Scrap Value - Cumulative Depreciation Allowances
Tax Savings on Lease = Tax Rate x Lease Payment
FM F9 Page 3
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