hi
costing answers
capital budgeting answer anyone send me
present value index means
3 Replies
Piyush Tanwar
(Assistant Manager - Accounts)
(1432 Points)
Replied 07 November 2011
Computation of CFAT :-
|
Particulars |
Machine X |
Machine Y |
|
|
Savings In scrap |
10,000 |
15,000 |
|
|
Savings in wages |
90,000 |
1,20,000 |
|
|
Gross savings |
1,00,000 |
1,35,000 |
|
|
Cost of maintenance |
(7,000) |
(11,000) |
|
|
Cost of indirect material |
(6,000) |
(8,000) |
|
|
Cost of supervision |
(12,000) |
(16,000) |
|
|
Cash flow before tax |
75,000 |
1,00,000 |
|
|
Depreciation |
(30,000) |
(40,000) |
|
|
Profit before tax |
45,000 |
60,000 |
|
|
tax @ 30% |
(13,500) |
(18,000) |
|
|
Profit after tax |
31,500 |
42,000 |
|
|
Depreciation |
30,000 |
40,000 |
|
|
Cash flow after tax |
61,500 |
82,000 |
|
Computation of NPV
|
PVCI: CFAT * cum PVF Machine X = Rs. 61,500 * 3.79= Rs. 2,33,085 Machine Y = Rs. 82,000 * 4.354= Rs. 3,57,028
PVCO: cost of machine * pvf Machine X = Rs. 1,50,000 * 1 = Rs. 1,50,000 Machine Y = Rs. 2,40,000 * 1 =Rs. 2,40,000
NPV = PVCI - PVCO Machine X = 2,33,085-1,50,000 =Rs. 83,085 Machine Y = 3,57,028-2,40,000 = Rs. 1,17,028
Advise:- A ltd should purchase machine Y , having greater NPV than machine X.
|
Piyush Tanwar
(Assistant Manager - Accounts)
(1432 Points)
Replied 07 November 2011
it means NPV... ! whts ur answer? is that sme?
Kamal
(article)
(165 Points)
Replied 07 November 2011
@ piyush.....bhai ques me npv calculate karne ko nahi kaha...present value index is where npv = 0 or pvci - pvco = 0 or pvci / pvco = 1
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