Doubt
If average Annual profit is given Rs 83,000.and given capitalisation rate is 10%.Is it means Co could earn Rs 83,000 on capital of Rs 8,30,000(ie 83,000/10%).
friend please comment
Yogendra.C
(CA - Inter BIlling Executive)
(37 Points)
Replied 05 September 2014
Ya, that It is Correct.
With the cash outflows of Rs.8,30,000 @ 10% Cost of Capital (COC) or Capitalisation Rate, it can earn Rs.83,000 Average Anual Profits,
For more capital budgeting info, Visit:https://accountingexplained.com/managerial/capital-budgeting/arr
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