Part (b, i) asked candidates to provide an estimate of the project’s value, and involved inflation, taxation and exchange rate considerations.

A large number of candidates achieved a good mark for this part. It was pleasing to see candidates using the purchasing power parity to predict future exchange rates and applying inflation rates and taxation to the project correctly.

However, common errors included starting to apply inflation from the incorrect year, not taking account of the balancing allowance adjustment, incorrectly adding an additional 5% tax when the amounts were converted into dollars and making numerical errors in their calculations.