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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?

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Gauri Shete

Gauri Shete

CA Final

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14-Apr-23 19:35

195

Answers (9)

question source pls?


Sriram Somayajula

Sriram Somayajula

Admin

15-Apr-23 21:25

It is rtp nov 22, Que.3


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Gauri Shete

Gauri Shete

CA Final

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15-Apr-23 21:32

Thread Starter

Gauri Shete

It 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

Sriram Somayajula

Admin

16-Apr-23 08:05

Okay sir here in que no 5.They have given assume no immediate increse in profitability thats why the ebit kept same 15,00,000 Otherwise we have to always calculate new level of ebit..am i right sir?

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Thread Starter

Gauri Shete

Gauri Shete

CA Final

4K+

17-Apr-23 18:58

Sriram Somayajula Admin

Yes

As long as it is a new project and not a replacement project


Sriram Somayajula

Sriram Somayajula

Admin

18-Apr-23 05:13

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


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Gauri Shete

Gauri Shete

CA Final

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18-Apr-23 09:14

Thread Starter

Gauri Shete

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

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


Sriram Somayajula

Sriram Somayajula

Admin

18-Apr-23 17:14

Thank u so much sir


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Gauri Shete

Gauri Shete

CA Final

4K+

18-Apr-23 18:09

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