- This topic has 3 replies, 2 voices, and was last updated 7 months ago by
John Moffat.
John Moffat.-
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johnbriane
- Topics: 146
- Replies: 147
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sir in the example 2 of the free lectures you had stated that
“the minute we sell this machine in two years time, we will buying a new machine .
and we assume the same cashflows keep getting repeated …
meaning 72972 will get incurred every two years …2,4,and so on…”i did not understand how $72972 will get repeated …
what does that mean sirthank you in advance
John Moffat
- Topics: 57
- Replies: 49622
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72,972 is the PV of just one 2 year cycle.
The 2 year cycle keeps getting repeated every two years and therefore the PV each time it is repeated is 72,972.
johnbriane
- Topics: 146
- Replies: 147
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so that means the scrap value also should be unchanged uncluding the cashflows right sir ?
John Moffat
- Topics: 57
- Replies: 49622
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As I state in my lectures, a big assumption that we always make is that the cash flows (including the scrap value) stay the same every time we replace the asset.
johnbriane
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