Hi Friends,
In this Capital Budgeting problem, what will be the post tax cash outflow?
Cost : 100 million
WDV : 87.433 million (after 4 years)
Sold for: 110 million (at the end of 4th year)
Tax Rate: 34%
2 Replies
Aliasgar Poonawala
(CA)
(180 Points)
Replied 10 April 2012
Post-tax cash OUTFLOW??
At the end of 4 years, Capital Gain will be 22.567 million, tax @ 34% = 7.67 million, so post-tax cash inflow on sale = 110-7.76= 102.33 million at the end of 4 years.
Please clarify what outflow do you require? Coz in what you have mentioned, apart from initial cash outflow (at year 0) of 100 million, there is no other outflow available. Correct me if I am missing something.
Harshal Fifadra
(Chartered Accountant)
(1489 Points)
Replied 10 April 2012
Agree with Mr.Ali , there will be a cash inflow of 102.33 million at the end of 4th year . Outflow at the end of 4 th year is not possible as there is no cost incurred ....
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