Investment appraisal part a, Net Present Value, Internal Rate of Return

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  1. Avatar of Jade Jade says:
    April 25, 2013 at 10:30 pm

    Can someone please help me, trying to procuce an investment appraisal for a project for my HND accounting exam. Can someone tell me if it is both fixed and variable costs that go in to get your cash flow or only variable? and also is depreciation of the machine included in this also?

    Need reply ASAP.

    Thanks

    • Avatar of carlynspringer carlynspringer says:
      May 23, 2013 at 3:02 am

      you must note that depreciation is a non cash component. It will not be in the cash flow.

    • Avatar of johnmoffat johnmoffat says:
      May 23, 2013 at 5:38 am

      You only include extra (incremental) cash costs to the company.

      So depreciation is never included – it is not a cash cost.
      Variable costs will be included – they will be extra costs.
      Any extra fixed costs that will be incurred by the company are included (but only if they are extra costs)

  2. Avatar of bellanystewart bellanystewart says:
    April 6, 2013 at 11:26 pm

    thank you soooooooo much !!!!!!!

  3. Avatar of nakeshia nakeshia says:
    April 4, 2013 at 8:58 pm

    A project has a normal pattern of cash flows. If the company’s cost of capital decreases what would be the effect on the NPV and the IRR.

    Would NPV & IRR stay the same?

    Need urgent reply.

    • Avatar of johnmoffat johnmoffat says:
      April 5, 2013 at 10:17 am

      The NPV will change – with a lower cost of capital, the NPV will increase (which is logical – with less interest cost the project becomes more worthwhile).
      Try is yourself – discount at a lower interest rate and see what happens.

      The IRR will not change – it is not dependent on the cost of capital.

  4. Avatar of 419850428 419850428 says:
    March 31, 2013 at 4:31 am

    Great appreciate !!!!!!

  5. Avatar of salwa925 salwa925 says:
    February 16, 2013 at 9:26 pm

    Why isn’t the question he is reading not in the course notes???

  6. Avatar of tansi235 tansi235 says:
    December 3, 2012 at 9:23 am

    thank you sooooooo much…its really helpful :)

  7. Avatar of marembon marembon says:
    November 24, 2012 at 12:12 pm

    On the test question 2 where is the 20% coming from.

  8. Avatar of chandhini chandhini says:
    November 24, 2012 at 10:13 am

    Is this John Moffat’s lecture?

  9. Avatar of levarshaw levarshaw says:
    November 9, 2012 at 9:17 am

    you are the best!!!!

  10. Avatar of accakeisha accakeisha says:
    October 26, 2012 at 12:57 pm

    my goodness!!!i dont think there are other lecturers in the world better than OT…………….i was lost on the internal rate of return….but now i am found…thx OT!!!

  11. Avatar of 1bo7jxj 1bo7jxj says:
    October 10, 2012 at 2:39 am

    not able to view it on android gingerbread tablet. pls advise.

  12. Avatar of eugboadi eugboadi says:
    October 9, 2012 at 5:14 pm

    i can’t access the online tuition tells me server not found so please help me out.thank you.

  13. Avatar of retha1955 retha1955 says:
    September 13, 2012 at 8:00 pm

    Thanks. Great lecture. It makes things so much more understandable.

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