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Sir I’m having some confusion in understanding timelines in investent appraisal projects.
Like if we invest the anount at the start of T1 than will we write the investment amount at T0 or T1?
And if we invest the amont at end of T0 than where will we write the investment amount at T0 or T1?
And also if the C.F starts from the end of T1 than where will we write this C.F at T1 or T2?
Sir kindly gave me the answers to these questions I’m a bit confused.
T0, T1 etc are points in time that are one year apart – that is the whole essence of discounting.
T0 is the start of the first year.
T1 is one year later – the end of the first year and start of the second year.
T2 is another year later – the end of the second year and start of the third year.
And so on.I do suggest that you watch my free Paper FM lectures on investment appraisal, because this concept is not new to AFM.
Sir so you are telling me that investment at the start of T1 will be investment in T0 and investment at the end of T1 is investment in T1 Right?
Almost.
An investment at the start of year 1 is an outflow at T0. An investment at the end of year 1 is an outflow at T1.
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