investment appraisal part a

This topic has 1 reply, 2 voices, and was last updated 11 years ago by John Moffat.

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December 7, 2014 at 2:48 am #219033
winters
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Sir if there’s a machine of 80,000 and from that we received some particular amount each year(total 4years) and it was 110,000 including interest, we subtract these two values which gives us 30,000 profit including interest. So can we somehow find out interest included of 4 years in this profit?
December 7, 2014 at 8:47 am #219069
John Moffat
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First it is not profit – we are looking at cash flows, not profits.

Secondly we account for the interest by discounting – that is the whole purpose of discounting.

You really should watch the free lectures which explain this.
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