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Investment decision

Financial Management

Sir, I have a doubt. In computing the 'Base case PV' in the new Illustration 52 in the IFIN class, why is the present value of cash inflow computed as 'Annual cash inflow (₹42 lakh) ÷ discount rate (14%)'? The PVCI is ₹300 lakh.

Muhammed Salih

CA Inter

★ 17K+

12-Sep-24 01:19

249

Answers (1)

Because it is clearly mentioned in the question that 42L is indefinitely received.. hence CF/r gives the PV of indefinite cash flows

aditya yanamandra

Faculty

12-Sep-24 11:48

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