[sheen]

Yes sorry and thanks alot Sir.

[sheen]

Oh thats an awesome answer!!! Thank you so much Sir. Wow!!! True life saver 🙂

[sheen]

Sir, i have one doubt.

The total depreciation is 160,000 – 20,000 = 140,000

While calculating the depreciation, we should divide it by the number of years rite?? This is what i was doing 160 – 20/ 4yrs = 35

I am still not getting it. Please if you can explain this point. Thank you

[sheen]

Apologies for using that word Sir. Didnt mean anything like that.

Thank you so much and i really appreciate your efforts. Thank you and sorry again.

[sheen]

LJM Co is considering investing in a new project which will cost $160000.
It has an expected life of 4years and scarp value of $20000.
The anticipated net operating cashflows are as follow:
Year 1 $40000
Year 2 $60000
Year 3 $80000
Year 4 $20000

Cost of capital is 10% pa.
What is the ARR?

I am getting 55.5%. Can you plz explain how to get the correct answer? Thank you and appreciate your efforts Sir

[sheen]

So we need to assume the number of shares??

[sheen]

Thank you Sir 🙂

[sheen]

Hi Sir,

I dont understand that in part a, its mentioned “financing cash flows only”. What is the difference? Not considering operating cost? If this is the case then why are we considering license fee?

And in part b , its taking account of operating cost where as in part (a) its not?

[Author]

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