Question ID: CMA 1295 4.12

  • This topic has 1 reply, 2 voices, and was last updated 2 months ago by Lynn Roden.
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  • #239336

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    This forum is restricted to members of the associated course(s).

    Manish Srivastava
    Participant

    In the question mentioned, i have 1 doubt , if in the Q both the Cash flow and the After-tax Earning is mentioned, which one to use for the NPV. I know what NPV stands for but in some questions we have used after-tax earning to solve for NPV.

    Please explain the difference and why we are not using after-tax earnings to calculate NPV

    Regards

    Manish

     

     

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  • #239387

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    Lynn Roden
    HOCK international

    Hello Manish Srivastava,

    Only cash flow is used in NPV analysis. If you have seen any of our capital budgeting questions that require the use of net income or earnings, please give me the Question IDs so I can investigate.

    As for the reason, well, that is just the way capital budgeting is done. Only cash flow is used.

    Lynn

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