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The condition for using present worth comparison(a) Cash flows are known.(b) Cash flows are in constant value rupees.(c) The interest rate is known.(d) All the abov...

Question

The condition for using present worth comparison(a) Cash flows are known.(b) Cash flows are in constant value rupees.(c) The interest rate is known.(d) All the above

The condition for using present worth comparison (a) Cash flows are known. (b) Cash flows are in constant value rupees. (c) The interest rate is known. (d) All the above



Answers

What is meant by the present value of money?

This question asked us to identify the one under the four following, uh, money value tools that ignores the time value of money in calculating the value of an investment. Right. So first, let's talk about the three that used time value of money. Thio measure these tools, right? So this would be a discounted cash flow bottle, right? So essentially, what these models do is they choose a discount rate which will apply to, say, say, in this year, um, an investment is worth $100 but next year, in this year's money, it may only be worth $98 so we use the discount rate. Thio assess how much we will value this investment in the future. On DSO you use this discount rate to figure out what the NPV is. So that brings us to our next one that present value NPV. So use the discount rate, uh, in order to discount future cash flows to the present value at the expected rate of return and then going along with the NPV is internal rate of return, which is I r R. So these are all very similar methods, so internal rate of return. What that does is that is going thio calculate the point where NPV equals zero. So that way, from that point on, we can figure out the actual rate of return that a project earns with this discount rate of money and keeping that in mind. So then the last one that's left that ignores the time value of money that is going to be the payback period method back period method, which is our option d. And what this does is, uh, instead of placing a time value on money, it's simply going thio count the number of years it takes to recover the funds that were invested. Ah, and say, for example, it takes five years to recover the cost of this investment to say, um, in year one, you invest 1000, and every year you get $200. Then you are simply going to ignore the discount rate almost $200 and take it for face value. And then that is going to give you the value of your money, ignoring the time discount rate

Okay, So we are doing the stag in Hendry. What is the meaning of it and looted expects. Okay, so in 20 is nothing. It is thieves all McKinney in. Okay, it is the law practice cheesed by business entity who put a bed finished course. Okay. I like to support Date is our That is a business on it. Always dealing in business, off selling for me. Chip, perhaps, like chairs and tables. And so for sex. And likewise. Okay, so he has to acquire Roma TDN. Okay? He has to be acquired. Rahmati, that people says such girls. Okay, now what happens? They never Then whenever I need business or any business or chases the inventory, Okay, What happens? There are new circumstances. 1st 1 is that for purchasing the 20. The business entity pays cash with a supplier. Okay. Against the chains, off material or in mentally on the supplier. Okay. And back bush in that cash to supplier will be considered in incomes to Okay, but let's suppose we have a good relations with suppliers and supplier may allow credit off who? Three. Once the business. Okay from movie. A case of it in 20. Okay, so it will become our level. If you will not be the supplier immediately on purchasing off from material orange country, then it will become a liability. Okay, so it will be classy fighting that in sheet. Okay, so one once again, like the recluse circumstances and veep urges Elementary. Either we will a gastro supplies immediately the lock and we would pay later on in time. And that component will be classified in Bellingen. Okay, so that is what we have given in the current caution. Okay, we can also this liability. We can also we can also refer to it. That's supplies. Okay. And this is supplies expense. So expense will be recorded income, statement and liability part because it is not a liability. It is just the inventor. Okay, so it will be classified in balance sheet. So that matches with Joyce. Hey, that is that engine. Okay, So supplies will be classified in bed, and she's okay. That's all part of a solution. However, you can write cheap mobile as well as she remembered on your load books for future reference. But answer will beat choice. Okay. Thank you.

Okay, so you we are going to win this time about the dome shareholders OK? And rejected him. Analogies. Okay, these are go olders. Okay, owners up Corporation, full board shares certificate. Be sure by corporation. Okay. Income, which is active. You. It could be shared orders. Okay. So you can write down this technical definition. However, it is very before it in nature. In accounting. A subject the chair orders owners off she had holed up is a on their own company. Okay. Know what happens? Shade awarded deceives income act disposal Who? The share order and that income we can pull Certify that income who did it? Okay. And it will be It will be classified as diffident about We've been ok under the detain. The dean doesn't statement. Okay? No, what we have in the statement in this statement they will prepare. That is the beginning. Balance off the retained earnings account. Okay, Followed by that the mill they will write down the profit generated for the Corinthia and results created out of that profit. Okay, for various time self purpose, like revaluation reserve capital reserves. We'll give various types ofit deserves ask. But it would ideally glad makes. And at the end, off all the operations, after doing all the appropriations, we will have retained earnings balance at the end of DP. Okay. And out of those items, there is a I don't actually know what between Os didn't that this paper to a shareholder. So that so our matches with Joi sey Okay, that that this income will be active. Beautiful. Or we can say this income will be classified in retained earnings statement. So that matches with choice. See? Okay, that's all for our solution. Thank you.

Okay, So you are going to understand They don't deposition, Okay? Little concepts. That How movie? The Gordie charging more in that position. Expense. Okay. The 1st 2 the amount off expense, most of the amount of experience that would be charged. Who comes who? The select beer and off a sect on yearly basis. Okay, so this definition shows that the deposition is an amount which is charged who income and income statement who show that baby is dearly the reason value of the asset, if you will use the except for of it production, Get a city. Okay, let's suppose you have purchased the machinery on starting off your business, okay? To produce for nature processed Jaber air chairs and tables like that. Okay, so if you have purchased machine beyond first and very 2019 then let's suppose you have purchased off $1000. So will actually remain same or the upcoming years. No, it's not revenge. It will be decreasing. Okay. The value will decrease by that. So because it's it will be used accordingly. Produced the for me. German. Did it hurt? Okay, so regard the deposition. We have first method that he will do like this. They record two types of entries. Okay, Their position, account epic. Who? A cynical. Okay. And it will be about this is the general in three. Okay, we have passed. Imaginative. So this is a direct entry to the court in that position, Like the deposition will be judged Do the respective, like machine three or any table for nature that is used for business purposes. Okay, so and it is a second mattered. And second method is used very because it very widely in the industry. And there's a magnet off for security purposes. Basically. So that position account deputed to acumen into that position. Okay, so so in second method, what we have didn't understand first method. Then they will face problems later, toe that however, we will understand. Second method. So it is the expense. It will be transferred to income statement. Okay. Like it down. This is the that. I don't before shoot in second shoot for your difference. Okay? And I don't do that. Precision expense will be transferred to incoming statement. Then I did actual profit and loss. Okay. However, a community that position will be shown in bed and cheap Okay, Now why do we use second method Will understand this. That's first of all. See this? That gift their position expense is charged in first matter. Then I said value is also decreased by the proportionate amount. OK, but in second method, what happens? The assert is reflected and violent Shoot at the actual cost. And the person that it is an expense charge on the early basically transfer through the circle community deposition who see So the identity will be able to see that Helmand deposition expense. We have charged so on. Okay? And how much book value off A sets an actual cost of asserts via having like no one ever Belen. Shit. Okay, so that is right. Accumulator deposition will be transferred to that and cheat. Okay. And back matches that matches. So the solution matches with the choice A. Okay, so the correct choice is choice. Okay. Always you can write. She'd violent you do for your future reference. That's all for our current solution. Thank


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