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Hi Sir
Concept:We always assume that inflow arrise at the end of year so its in year one..but still i confused about timing EXCEPT tax and lease or buy Time..
in Operating C/F..in some questions it says (Advance)..What is mean by that i mean we already consider C/F arrise in year 0..We write in year1 only because its arrise in end of year 0
then why we OCF from year ZERO??
Also is there any RULE through which i understand timing clearly??
When discounting we are talking about points in time that are 1 year apart.
Time 0 is ‘now’ – the start of the first year.
Time 1 is one year from now – the end of the first year / start of the second year (we are not worried about an odd day when discounting!!)
Time 2 is two years from now – the end of the second year / start of the third year.
And so on…..
Of source sir you are right..
And its impossible to start inflow without investing in year0…I mean start inflow before year 0Then whats happening in BPP 16/17 Mcq# 97
What you mean by ‘what is happening’???
I assume you are referring to the timing of the net cash inflows.
Since the question says that they are payable in advance, the payment for the first year will be at the start of the first year which is time 0 (as I explained in my previous answer). The payment for the second year will be at the start of the second year which is time 1, and so on.Just as I wrote before.
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