What is meant by terminal value of cash inflow in relation to modified internal rate of return method of capital budgeting?
Please explain in clear and simple language.
2 Replies
* Krishna *
(CA Student)
(6149 Points)
Replied 04 September 2010
The discount rate at which the Present Value of a project's cost is equal to the Present Value of its Terminal Value (TV), where the terminal value can be founded as Sum of future values of cash inflows, compounded at the firm's Cost of Capital.
NUKUL GARG
(Senior Associate Consultant)
(1231 Points)
Replied 04 September 2010
TERMINAL VALUE MEANS THE SALVAGE/RESIDUAL OR AFTER THE PERIOD(WHICH IS GIVEN IN QUES.) VALUE ON BASIS OF WDV OR SLM. THEN ON THIS PV IS CALCULATED.
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