ACCA FM June 2026: The NPV Cash Flow Mistakes Costing You Easy Marks (SD 2025 Examiner Report)
The NPV question is the easiest 15 marks on the FM paper — and the place most candidates leak marks
The ACCA FM examiner keeps writing the same report. Candidates don't fail the NPV question because discounting is hard. They fail it because they put the wrong numbers in the table — total balances instead of movements, profit instead of cash, tax in the wrong year. Fix four habits and the marks are yours.
What the September/December 2025 examiner actually said
Working capital is described as the single most reliable mark-loser on the paper. Candidates put the full working capital balance into the cash flow line each year. It isn't a cash flow. Only the year-on-year incremental change is — and the whole balance is recovered as a cash inflow at the end of the project.
The second repeat offender is using profit instead of cash. Sunk costs — research already spent, market research already commissioned — keep appearing in the table. Depreciation gets left in instead of being added back. NPV discounts cash, not accounting profit. If the cost happens whether or not you take the project, it is irrelevant.
Third: tax timing. The report notes candidates defer tax by a year automatically, out of habit, even when the question states tax is paid in the same year it arises. Read the timing sentence in the question — don't run on autopilot. The same applies to balancing allowances when an asset is sold for something other than its tax written-down value.
And when the question moves to WACC, the classic errors return: using book values instead of market values, taking the coupon rate as the cost of debt instead of calculating the IRR of the after-tax flows, and forgetting the tax shield on debt entirely.
Worked example: working capital
A project needs working capital of $100,000 at the start, rising to $110,000 and then $121,000, all recovered at the end.
Wrong (what loses marks): –$100k in year 1, –$110k in year 2, –$121k in year 3. The candidate has charged the business the full balance three times over.
Right: –$100k at T0, then only the increase each year — –$10k, then –$11k — and a single +$121k inflow when the working capital is released at the end. Same data, completely different — and correct — answer.
What to do before June
1. Build the table in changes, not balances. Working capital and any incremental investment go in as movements. Add a release line for the full balance in the final year. Do this every time you practise and it becomes automatic.
2. Strip and convert before you discount. Cross out sunk costs the moment you read them. Add depreciation back to profit to get cash. Only then put a number in the table.
3. Read the tax timing sentence — every time. Don't assume a one-year lag. Note where tax is paid and where capital allowances start, then apply it consistently across the whole question on the own-figure rule.
The bottom line
FM passed at 50% in March 2026 and 48% in December 2025 — roughly half the room. The candidates on the wrong side rarely lack the technique; they lose method marks to careless cash-flow setup. Show every working, get the relevant cash flows right, and the most predictable question on the paper becomes your safest marks. Don't hand the examiner a reason to dock you.