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I have no idea what you mean. If there is a new project then it will require investment of funds and a question will tell you what investment is needed.
Spending money on a project is by definition an investment. Investing money means paying out money!
Helo sir,when the NPV is negative at say 12% (which is the required rate of return) what will BE THE discounted factor for IRR ?
less than or greater than 12?Using the interpolation I got a percentage greater than required rate of return..
Seems wrong to me…If the NPV is negative at 12% then the IRR (when the NPV is zero) must be less than 12%.
(However it makes more sense in Section C questions in the exam to use the IRR function in the spreadsheet provided rather than make two guesses).
How could it be tax deductible? They are receiving money, not paying an expense!!!
The only tax affect of the disposal proceeds is that there will be a balancing charge or allowances in the year of sale calculated as the difference between the disposal proceeds and the tax written down value.
This is all explained in my free lectures on investment appraisal with tax. The lectures are a complete free course for Paper FM and cover everything needed to be able to pass the exam well.
Hello sir,if a maintenance happen in the seventh year of the project which terminatein year 5 ,is such maintenance relevant in such questions since it happens after the termination
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