Question 1 - Part b (i)

In this lesson

1. 0:00 Writing the report introduction
2. 2:01 Setting up the NPV spreadsheet structure
3. 3:01 Calculating sales revenue with inflation
4. 5:50 Working out variable and fixed costs
5. 8:00 Accounting for training costs and capital allowances
6. 12:00 Computing taxable profit and tax relief
7. 16:43 Handling investment, disposal, and working capital
8. 22:06 Calculating and interpreting net present value

About this lesson

The video walks you through building a professional report that evaluates the project using NPV analysis. You'll see how to set up a clear introduction, organise your workings systematically, and calculate each component step by step: sales revenue (accounting for inflation), variable costs, fixed costs, training costs, capital allowances, tax relief, working capital changes, and disposal proceeds. The tutor emphasises the importance of well-structured workings—these earn many of the marks—and shows you how to use spreadsheet formulas efficiently to avoid errors and save time under exam pressure. A crucial focus is handling the moving parts that trip up many students: different inflation rates for different cost types, capital allowances on a reducing balance basis, balancing allowances or charges in the final year, and working capital as a change in cash flow rather than an absolute figure. You'll also see how to apply the NPV formula correctly, discounting cash flows from year one onwards at the given discount rate (11% in this example) and adding back the year zero investment separately. By the end, you'll have a complete NPV calculation ready to support your report conclusion on project acceptance. The video reinforces time management too—knowing when to move on if you're running behind keeps you on track to maximise marks across the full question.

Duration: 24m