[jeff]

Welcome to the Q2 2017 CPA Exam Study Group for BEC. 🙂

[emackCPA]

I believe because the answer says “estimated” not the actual effective tax rate. Only the current effective tax rate can be used not an estimate.

[Joe]

The Discount Rate is a component of calculating NPV so if you have a higher discount rate you are going to have a lower NPV because it reduces the future cash flows. Tax Rates have little impact from an NPV prospective, you don't get to deduct Cash Flows on your Tax Returns. Check this link and look at the section for The Discount Rate, maybe that will help
https://yourbusiness.azcentral.com/net-present-value-future-cash-flows-increase-decrease-discount-rate-increases-12255.html

[emackCPA]

Deprecation for any future projects act as a tax shield for paying less taxes. The depreciation for the project is taken against the effective tax rate to reduce the amount of taxes to be paid. This is why the tax rate does matter for NPV projects but just not as a estimated tax rate since it is not in active yet. Please keep in mind that tax rates have a huge impact on NPV.

[marine]

I think this MCQ seems to have a problem.
A decrease in the tax rate may either decrease or increase the NPV of the future net cash flows, just depending on factors such as the expected cash inflows and the expected depreciation tax benefits.

[Shark]

how is the studying coming on guys?

[Holly]

@Shark it's going great for me! I hope to keep up the momentum. How about you?

BEC - 79
REG - 85
AUD - 5/27/16

[emackCPA]

Please everyone share your experience with the new format of BEC testing after your sit. I know the material is not changing but I do want to hear everyone's experience.

Thanks!

[Joe]

I am a bit lost on this question… (CPA 04082) I don't particularly understand what the 70% Variable Cost have to do with the Sales

Gartshore Inc. is a mail-order book company. The Company recently changed its credit policy in an attempt to increase sales. Gartshore's variable cost ratio is 70 percent and its required rate of return is 12 percent. The company projects that annual sales will increase from the current level of $360,000 to $432,000, but the average collection period on receivables will go from 30 days to 40 days. Ignoring any tax implications, what is the cost of carrying the additional investment in accounts receivable, using a 360-day year?

The answer is:

$360,000 Sales (70%) (12%) (30 Days/360 Days) = $2,520

The cost of the investment under the new proposal is
$432,000 Sales (70%) (12%) (40 Days/360 Days) = $4,032

The difference in the two alternatives is $1,512

Please help!

[Anonymous]

The 70% Variable Cost would be considered the relevant cost or additional investment in A/R. The remaining 30% goes to the bottom line.
Before (30 days): 360,000*(30/360 days) = 360,000*0.083 = 30,000
After (40 days): 432,000*(40/360 days) = 432,000*0.111 = 48,000
Difference between Before & After = 18,000 increase in A/R
18,000*70% additional investment cost = 12,600
Required Return = 12,600*12% = 1512

I hope this helps!

[Anonymous]

What is everyone's experience with the Becker Mock Exam Written Communication portion? I made 100% on all 3 of those. Are those actually evaluated by Becker or if you do them you get 100%? I was very worried about this portion of the exam, until I took the mock exam. I'd feel more confident if I knew that Becker was actually evaluating these. 7 DAYS TO GO!!!

[emackCPA]

The WC in the Becker Mock exam is not graded. Those are given a 100% for the attempt at the communication (words in the blank space). Becker currently does not grade any of the communication so you are on your own for that part.

[Anonymous]

Thank you emackCPA!! Now, I will stress out again! haha!

[Anonymous]

I took the sample test on the AICPA website today. When I got to the TBS area, there was a resource tab that had the formulas I needed to answer the question (debt to equity, quick ratio, Return on Equity). I didn't know the formulas would be provided on these. I know they say the sample format, with the tabs, is the same with the actual exam. Anyone know if this is true for the actual test?

[Tncincy]

I am 13 days out and I still don't feel ready….. 🙁 Oh well I guess it's not about feelings…..back to study.
and where is the back to the forum button?

It begins with a 75
Been here too long as a cheerleader....ready to pass

[Anonymous]

I'm with you tncincy…… I'm 6 days out and don't feel ready!

[Author]

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