- Sales for 9 year period
- Yr 1 sales are £3,560,000
- LFL sales growth in YR 2 of 5%
- LFL sales growth in YR 3 to 9 is 2%
- Discount factor of 10%
Replies (15)
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I get a very similar answer:
1 3,560,000
2 3,398,182
3 3,151,041
4 2,921,875
5 2,709,375
6 2,512,329
7 2,329,614
8 2,160,188
9 2,003,083
I get a very similar answer:
Can't be bothered to put the numbers in a spreadsheet myself but I don't understand how it's possible to get two different answers to the question (when the answers are not rounded, etc.).
Answers are rounded.
When calculating PV, if using a table the PV factor is rounded to 3 dp.
Not sure why you are all discounting, whilst the question gives a discount rate it does not ask for the discounted value of the sales, accordingly it might just be there to confuse the candidates as extraneous detail; remember always read the question.
Well, in my case, because the OP asked. Could be a forecast, FRS 102 calculation or homework. Who cares?
"Can someone please tell me what sales revenue would be for the 9 years, itemised by year? Thanks"
The question is as above, that is my point, no request is made for NPV re the Sales Revenue, just the sales revenue is requested. The fact we are given a discount factor could be mere distraction.
At school I had a number of teachers constantly telling / yelling at me to always read the rubric, that is my point.
Aritmetically there are different ways you can approach it but they all come out the same. Personally I would calculate the raw sales. i.e. apply the appropriate growth factor to each year to get the sequence of undiscounted sales and then calculate the discounting subsequently.