[sunflowerdragon]

tks for clarification.

[sunflowerdragon]

depn and int exp r non-cash items. exp u wld hv ‘spent’ so now you add back to reverse its effect. on the other hand inv income money came in, now to reverse u deduct. that’s how it works. think abt its original effect on cash flow.wiz practice
u will understand.(dont try memorising )

[sunflowerdragon]

Profitability Index yes used for divisible projects only. its calculated as NPV divided by Initial Investment (you get NPV per $ invested) .You will use the PI to rank the projects.

hope this ans yr qns

[sunflowerdragon]

hey i jus found the fastest ans to my qn.

PV = 1/(1+r)^n

r is the disc rate and n is the year (T)

so in qn 1 of mock exam we calculated wacc has 21%
use this for NPV cal for b
DF 21% eg year 2 is 1/(1.21)^2 = 0.683 and so on jus change the n accordingly.

hope ok. tks

[sunflowerdragon]

ookie. tks man ! i jus got it . you r great man. tks a lot. 😉

[sunflowerdragon]

tks. how did u get the 6 % ?

[sunflowerdragon]

me too will appreciate. tks

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