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If in the question the line ' this investment is expected to earn same rate as funds already invested' was not given then also were we supposed to calculate the new ebit or then can we continue with ebit given in question?
Answers (9)
Thread Starter
Gauri SheteIt is rtp nov 22, Que.3
When a new investment is made obviously it will have to generate NEW EBIt. EBIT % may be the same as pre-existing investment or a new value/rate if mentioned. If nothing is mentioned, one has to assume that the old EBIt % will continue. Please do not assume that amount of overall EBIT will not increase at all
Sriram Somayajula Admin
As long as it is a new project and not a replacement project
I am extremely sorry sir but i didn't get this.Can you please tell the exam question language for what you said for example and better understanding
Thread Starter
Gauri SheteI am extremely sorry sir but i didn't get this.Can you please tell the exam question language for what you said for example and better understanding
If it is a replacement project there may be a case where just a machine is being replaced with no increase in efficiency - in such a case there is no scope for improvement in EBIT