I will post my questions here from now on, hope you all can help me
question 1: about computing the NPV of a Project (budgeting)
when calculating salvage value of a project, the cash flow is inflow : loss x t or outflow: gain x t ---------why??I know there is tax reduction or more tax, but how about the rest part of loss x (1-t), and gain x (1-t)
I think the cash flow should be outflow : loss x(1-t), and inflow gain X (1-t). for example, if there is a loss of $10, tax rate 40%, then tax reduction would be $4, so eventually we loss $6, means an outflow of $6
the example is on page 36
tks
question 1: about computing the NPV of a Project (budgeting)
when calculating salvage value of a project, the cash flow is inflow : loss x t or outflow: gain x t ---------why??I know there is tax reduction or more tax, but how about the rest part of loss x (1-t), and gain x (1-t)
I think the cash flow should be outflow : loss x(1-t), and inflow gain X (1-t). for example, if there is a loss of $10, tax rate 40%, then tax reduction would be $4, so eventually we loss $6, means an outflow of $6
the example is on page 36
tks