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Exam CCP Topic 1 Question 1 Discussion

Actual exam question for AACE International's CCP exam
Question #: 1
Topic #: 1
An American company plans to acquire a new press machine from a Dutch manufacturer under the following conditions. One question remaining to be answered is the expected amount of capital recovery when salvage is accounted for.

The following question requites your selection of Scenario 1.4.150 from the tight side of your split screen. using the drop down menu, to reference during your response/choice o' responses The present worth interest factor for this purchase in the fifth year would be:

Suggested Answer: A Vote an answer

The present worth interest factor for this purchase in the fifth year can be determined using the formula for the present worth of a single amount:
PW=1(1+i)nPW = \frac{1}{(1 + i)^n}PW=(1+i)n1​
Where:
iii is the interest rate (10.5% or 0.105)
nnn is the number of years (5 years)
Using the formula:
PW=1(1+0.105)5≈11.6474≈0.6209PW = \frac{1}{(1 + 0.105)^5} \approx \frac{1}{1.6474} \approx 0.6209PW=(1+0.105)51​≈1.64741​≈0.6209 So, the correct answer is A. 0.6209.

by Dawn at Sep 29, 2024, 08:34 AM

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