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In your lecture notes, chapter 7 investment appraisal, include DCF-NPV, DCF-IRR, ROCE-ARR and payback period. Chapter 10 investment appraisal under uncertainty, include sensitivity analysis, expected value, simulation and risk adjusted discount rat-CAMP. I’m bit confused, are there any connections between 2 chapters? All numbers in chapter 7 are estimated anyway, so they are not certain too. In exam, if I am asked to discuss and comment the investment appraisals, what things should I included? Thanks.
There is a big connection!!!!
In the exam we treat the numbers as though they are certain, but if you get the chance to mention it in the written part then you should discuss the uncertainty.
For calculations, if the examiner wants you to deal at all with the uncertainty then he will specifically ask you to (and it would almost certainly be sensitivity).
With regard to discussion, best is to watch my lectures on these chapters.
Sir, one question..
If an asset having a life of 4 years is bought on the first day of the year, and tax is paid in a year in arrears, then we will consider tax benefits from the years y2-y5.If it has a life of 4 years, is bought on the last day of the year, tax is paid in arrears, then tax benefits accrue from y1-y5
If it has a life of 4 years, is bought on the first day of the year, tax is paid in the same year, then from when to when will the benefit accrue?
If it has a life of 4 years, is bought on the last day of the year, tax is paid in the same year, then from when to when will the benefit accrue?
Please sort this out! Thanks a lot in advance! This has been worrying me! Thanks again!!!!
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