While calculating IRR,
1. Should we consider Govt grant in add , as we are not refunding the same.
2. Ongoing project say after 5 years, should we factor into salvage value ? What else, if project runs over 15 years plus
Menu
Irr calculation and grant in add
Replies (2)
IRR for what purpose? Capital equipment? All cash inflows and outflows are factored. Use =irr in excel and it asks for a rate. Rather use XIRR which asks for dates.
IRR with government grants:
• For project IRR (from the project's perspective), include the grant as a cash inflow at the time it's received (since it isn't refundable, it reduces net investment). Equity IRR similarly includes it.
• If the grant is conditional and may need refund, consider probability-adjusted inflows or sensitivity analysis.
• Ongoing maintenance (capex replacements) should be included as cash outflows in the years incurred. Depreciation isn't a cash flow, but its tax shield is (in post-tax IRR).
• Lenders often compute IRR excluding grants (pure project). Present both.
Recent Topics :
- Register on Income Tax as CA
- Deduction In Employee Provident Fund
- This is a gift for all Chartered Accountants and P
- NRI, ITR-2 FY 2025-26: AIS Part B2 (SFT) shows hig
- Wallet query for GST.
- 25-26 exempted sales
- Hotel stay below Rs.1000/- GST applicable or exemp
- NRI, ITR-2 FY 2025-26: AIS Part B2 (SFT) shows hig
- Generate E-Way Bill for 4 Nos. Suppliers Involveme
- Section 54F Exemption
Related Topics :
CAclubindia
