#computation of terminal inflow terminal value38.8

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FM, CA Inter FM, CA Inter Financial Management, Capital Budgeting, Terminal Inflow, CA Inter MAY2020

FM, CA Inter FM, CA Inter Financial Management, Capital Budgeting, Terminal Inflow, CA Inter MAY2020 Chapter 7 Investment Decisions CA Study Material   #Call_Us_07840046600 #CA_Inter_Pendrive_Classes #CA_Inter_PD_Classes #FM_PD_Classes #Best_FM_Classes_For_CA_Inter Not Just Class room Recording Enjoy Financial Management as movie Computation of Terminal Inflow

CA Inter Playlist Video Financial Management : - https://www.youtube.com/playlist?list... Revision Class SM 2019 Nov : - https://www.youtube.com/playlist?list... Strategic Management : - https://www.youtube.com/playlist?list... Strategic Management Old Syllabus : - https://www.youtube.com/playlist?list... Capital Budgeting is a plan for all kind of fixed assets and long-term investment.   Why Capital budgeting is necessary? It is necessary because of the four reasons:- 1.Huge expenditure 2.Irreversibility 3.Long-term gestation 4.Complex decision There are two decision, situation 1. Mutually exclusive case 2. Accept and Reject. Mutually exclusive means acceptance of one will automatically reject the rest of all. Accept and Reject means more than one proposal can also be accepted if the fund is available New name of capital budgeting: Total cash inflow and total cash outflow We need to be very careful about calculation of terminal inflow: It will be relevant only in case of Expansion , diversification , modernization  of old asset. In the process of terminal inflow there can be 3 conditions- 1When sale value of old asset is greater than written down value: 2. when sale value of old asses is less than written down value. 3. When sale value of old asset is equal to Written down value 1 When sale value of old asset is greater than written down value: In this case, there will be a profit on sale of asset.  On this profit, income taxneed to be paid. Even though it looks like capital gain, but it is the revenue profit. Yes we can say it as short term capital gain. Therefore, revenue tax is relevant.  In this case, terminal inflow will be sale value of asset less tax on profit on sale of such assets.. Profit or loss we will calculate in working Concept question 1 Sale value of old asset= Rs.5000, Written down value=Rs.3000, Income tax rate=40% Compute the amount of terminal inflow