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Why scrap value of 7 is not added in cash flows?
How they have done duration calculation?
Why TAD for years before 6 not recongized?
Why they have done indirect costs , infrastructure costs,dep costs calculations from year 2 why not 1?
1. The question says in note 4 that the proceeds from sale have already been included in the forecast cash flows.
2. They have calculated the duration in the normal way as explained in my free lectures. If you are not clear about where they have got any of the individual figures from then say which ones.
3. They were already included in the cash flows – the question says that they are the post tax cash flows including the estimated tax benefits from capital allowances.
4. It is clear from the original cash flows given in the question that the project takes two years to complete and that the operating flows therefore only occur from the second year onwards.
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