#2 Capital Budgeting (Replacement Problems) ~ Financial Management [For B.Com/M.Com/CA/CS/CMA]

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Explained the procedure to solve few problems based on replacement of an existing Plant and Machinery. In this lecture I have calculated the followings :
1. Initial Investment of the proposal.
2. Subsequent Cash Inflows from the proposal.
3. Terminal Cash flows of the proposal.
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[@commerceclassesaanaa5050]

It is an incomparable journey where the guru leads you from the visible to the invisible from the material to the Divine from the ephemeral to the enternal..tnkuu so much for being my guru ...thnkuu sir g

[@jalantent6574]

sir tax rate 40%, h so - initial invt. =144000, cash flow for 10 year = 65600. thank you !

[@UDITGarg-of1pb]

Bro 65600 kese and last mn tax kyon nahi liya

[@sarthakpandey5564]

Pls anyone tell why old depreciation deducted from new depreciation.

[@harshitagarwal8658]

​@@sarthakpandey5564because in case of replacement we have to calculate incremental cash flow so we will take incremental dep

[@pranavpai7574]

Really grateful to you sir...your classes helped me a lot to revise my CA chapters. And your ratio analysis formula remembering techniques are simple and we can generate our formula without remembering it

[@UDITGarg-of1pb]

Sir if existing asset has book value 10000 and new asset value has 20000 And life of both is 4year and if new asset sell today then sale at 5000 or at end of 4 year then 1000 and sale value of new asset at the end of 4 year is 5000 then when we take capital gain in initial cash outflow or in terminal cash inflow

[@gitakumari1933]

Thanks a ton sir ..... no-one can teach as like u...so simple and long lasting impact...🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏🙏

[@bolt4681]

it's very simple and logical way of teaching , sir really I have taken subscription from other teachers but I am watching your videos because it's very easy to understand

[@sarthakpandey5564]

Please anyone tell why old depreciation deducted from new depreciation 🙏

[@muhammadfaisalgandhi2342]

Lot of concept of management accouting is clear from your videos..Great sir

[@parthchhabra1527]

Sir plz make a video on introduction to auditing u provide very detailed explanation... loving them

[@CANareshAggarwal]

Auditing is not my subject dear..

[@parthchhabra1527]

CA. Naresh Aggarwal oh wish it was I found you the best online teacher..

[@sanababar8447]

@@CANareshAggarwal sir in 2nd example when we find terminal cash flow .. Is tax also apply in capital gain or loss?

[@manasiyadav4149]

@@sanababar8447no because it is the scrap value . If we get a profit on selling the old asset then we will apply capital gain or capital loss .

[@surbhisingh918]

@@CANareshAggarwal sir please make a video on cash flow model of financial management I've an exam please sir

[@dimpysharma4289]

Very well explained than my college teachers

[@milichawla2675]

Sir you teach very well, exams se pehle topic acche se clear hojataa

[@sarthakpandey5564]

Why old depreciation deducted from new depreciation?

[@iqraqureshi436]

just saw two of your videos and i was able to do most of the questions my self thank you

[@CANareshAggarwal]

Excellent!

[@khushipitaria6574]

You are the BEST

[@CharchawithChandarana]

Sir agar profit on sale of old asset hota toh ?

[@ajazeduhussain9332]

Sir Namashkaar, Sir Question is not visible for those who are watching on KZbin please increase the font of question. Thank you Sir

[@swetajoshi3388]

Ap bot acha pdhate Ho Sir... God bless you 💖😊

[@akashcmali757]

thanktoy so much sir❤ Clearly understood...

[@Yourtutorificteaher]

Best of all♥️

[@Khushi-j3x9l]

17:01 sir karampura se mein hu.. sunn kr acha lga😊

[@ketangupta8448]

Thank you sir 🙏

[@kidsvr5430]

@C.A naresh aggrawal Sir in second q why did we subtracted the value of old asset ? Shouldnt terminal value be only the scrap value of new assets ?

[@kimopple]

How would you work this question? Seduck has just replaced a set of hydraulic screens that had been in operation for 6 years with a newer screening system that cost $180,000 installed. The old system cost $140,000 and had been depreciated as a 10-year MACRS asset. Its salvage value is $10,000. What is the NINV for the new equipment? Assume a 40% tax rate. Use the rounded MACRS schedule listed below:(10-Year Depreciation Schedule: 10%, 18%, 14%, 12%, 9%, 7%, 7%, 7%, 7%, 6%, 3%)

[@sanskarpandey257]

To determine the Net Investment Value (NINV) for the new equipment, we need to calculate the initial outlay for the new system, taking into account the effects of taxes and the sale of the old system. Calculate the remaining book value of the old system. The old system has been depreciated for 6 years using the MACRS schedule for a 10-year asset. MACRS Depreciation Schedule for 10 years: Year 1: 10% Year 2: 18% Year 3: 14% Year 4: 12% Year 5: 9% Year 6: 7% Year 7: 7% Year 8: 7% Year 9: 7% Year 10: 6% Year 11: 3% The total depreciation over the first 6 years is: 10%+18%+14%+12%+9%+7%=70% Therefore, the remaining book value after 6 years is: Book Value=Original Cost×(1−Total Depreciation) Book Value=140,000×(1−0.70)=140,000×0.30=42,000 Calculate the after-tax salvage value of the old system. The after-tax salvage value accounts for any tax impacts from the difference between the salvage value and the book value. Tax Impact=(Salvage Value−Book Value)×Tax Rate Tax Impact=(10,000−42,000)×0.40=(−32,000)×0.40=−12,800 The negative tax impact implies a tax saving. Thus, the after-tax salvage value is: After-tax Salvage Value=Salvage Value+Tax Saving After-tax Salvage Value=10,000+12,800=22,800 Calculate the NINV (Net Investment Value) for the new equipment. The NINV includes the cost of the new equipment minus the after-tax salvage value of the old equipment. NINV=Cost of New Equipment−After-tax Salvage Value of Old Equipment NINV=180,000−22,800=157,200 Therefore, the Net Investment Value (NINV) for the new equipment is $157,200.

[@natureofeverything]

why did you take depreciation of old asset as sale price/remaining years in the second example question

[@हर्ष-श9ण]

Great sir Good video

[@sarthakpandey5564]

Sir pls tell why old depreciation deducted from new depreciation.

[@harshkumar9372]

Good understanding

[@sarthakpandey5564]

Why old depreciation deducted from new depreciation?

[@tanushreebishoi]

Sir in terminal value of cash inflow, shouldn't it be Terminal cash inflow =annual cash inflow of 4th year+ scrap value of new machine =48600+18000, since new machine will be sold at the end of 4th year?

[@605ashishtomer6]

thank you sir aapne ye video post kri nhi to hamara kya hota

[@manvikumar9469]

Amazing explain

[@irfaniqbal4527]

very nice sir good

[@krishwadhwa5470]

sir jo jo aap padhate ho smjh aa jata hai, but patani esa question isi topic se DU ke exam me ni ata. Sala kuch smjh hi ni ara aapka method padhne ke baad dusre method smjh hi ni ara. Aur aap bhi aasan aasan sawal lagwaate ho thhoda tough question liya karo atleast because the Exams are not made to check our conceptual clarity they are made to see how much root learning we can do.

[@kidstv.8612]

Dil ki bat bola bhai...😅

[@learningfunn]

Ye questions sirf base concept ko clear karne ke liye hai. Practice more questions from tenure's book . Ye 2-3 questions padhkar du ka paper to solve nhi hoga na

[@karansanwal14]

😂😂😂

[@MundrikaEducation]

free mein kya chahte ho

[@YashSharma-4]

😂Or sir joo mu bana k mundi hila dete h na laghta h easy h....sala easy easy karwa dega views lelega 😂

[@sujeetgaur789]

In second question sir on Terminal cash inflow where the tax

[@tufanbaid]

@CA. Naresh Aggarwal Sir in the last question (Terminal Cash Flow part) we also have to add Tax Saving on Capital Loss as it is told in the question...please clarify it Sir

[@sarthakpandey5564]

Why old depreciation deducted from new depreciation

[@barbolascientist8513]

we havent suffered any capital loss while selling the new asset that's why tax saving is not taken in terminal cash flow, we have just suffered loss in comparison to the hypothetical situation where we could have made 40,000 but we made only 20,000, not an actual loss to be shown in the statement of P & L I am very bad at explaining 😅 dont know if you will get it or not or may be you have figured it out already

[@saurabhmewadar.9198]

Thanku so much sir🙏

[@VanshikaMalik2105]

Thank you so much sir.. you're a blessing 🙏✨

[@V_Shiv]

Sir in eg3.5 in terminal cash flow why u have not subtracted sale of scrap of old from new?

[@muskanjindal6558]

Sir why we are not considering salvage value of old asset in initial cash outflow?

[@tjchandana414]

Sir please do a video on risk analysis in capital budgeting

[@SoSkkk]

Sur in illustration 3.5, you have taken the wrong tax rate of 30% instead of 40%

[@kundankumawat4363]

Ha

[@jasleenrayat3392]

Thanks sir .. Really helpful👌❤

[@HyPeR_g0d65]

Well explained

[@sarthakpandey5564]

Why old depreciation deducted from new depreciation?

[@princeedupoint1437]

I am very thankful to you

[@shanmohammad4957]

Bhot bhot shukriya sir 😊

[@Anushka-ls1uj]

aweasome sess

[@shivamshah8387]

Thank you sir explained so easily 🙏🙏🙏🙏

[@TusharAhuja-er7wq]

Sir aapne terminal cash flow mei second question mei savings on capital loss to add karke dikhaya nahi

[@blacksugar8743]

Sir second question ke terminal cash flow mai tax saving on capital loss kyu nhi add kiya?

[@CrazyCircle]

The book I'm reading from I've purchased it from Jain Book Depot Karampura 😂

[@harshkumar9372]

Thank you sir

[@dishadhar9784]

second question given tax rate is 40% but you solved on 30% tax rate, please explain.

[@amaanjazah8064]

Yes i has same problem

[@amaanjazah8064]

I think only u had watched full video with so much concentration in all of them. Why no body did put this question. Means why sir uses 30% tax when they say 40% tax rate

[@adityamukherjee2230]

Same problem sir?

[@parwatikharkwal8592]

Why is terminal inflow not negative in first question?

[@pratibhasingh1647]

@@parwatikharkwal8592 q ki wha ek hee asset ki scrap de rkhi h

[@way2worldoffinance436]

Tax rate is given as 40% in the problem ??

[@kajalbajaj2315]

❤thank you

[@surbhi5654]

Sir terminal cash inflow m saving on capital gain bhi to add hona chya vo kitna amount add hoga 40000 y 40000 k 30%. In 2 question

[@50shoaib]

Thangs again and again

[@pratikshalalwani5145]

U explain very well 👍

[@Nimisha230]

thanks a lot sir.

[@sanababar8447]

sir in 2nd example when we find terminal cash flow .. Is tax also apply in capital gain or loss?

[@easyease4584]

I have the same doubt I think we take it after capital gain tax

[@FORYOU-ub9bt]

Sir is your video available for risk analysis techniques in capital budgeting chapter

[@hardikshah3570]

Mast sir

[@malvikabadola2451]

sir please upload more videos on question...please...

[@indiatax9064]

Impressive

[@learner4674]

Sir plz make video on capital gain in financial management

[@kdzformation6159]

Sir How to calculate Discounted cash flow in pay back period

[@JoblessNunnu]

Intro is narcos prologue Indian version

[@vlogsbytanu]

Tysm sir 🙏

[@architbansal1069]

Sir minimum rate of return wale question bhi krvado ........jisme present value of an annuity calculate krte hai Pls sir 🙏🙏

[@Writerography]

Sir from which book do you teach?

[@RDK0123]

In illus 3.5 why no tax treatment on salavege value

[@yogeshkataria2874]

Sir plz upload more videos of financial management

[@truegamepower289]

kindly mention the textbook or course pack that you are using

[@imanik6758]

tax k Income from business k upor video banaiye sir

[@princegupta23]

Good ..and thank u

[@akshaybagal2208]

Sir please tell which book are you using for this numerical. It'll be very useful

[@mdmanauvar1544]

rp rastogi book sultan chand and son publication

[@sarthakpandey5564]

Why old depreciation deducted from new depreciation ?

[@newguptacrane9663]

super sir

[@ishitasuyal1310]

Which book has he used for the reference?

[@howtokillyourmotherinlaw4198]

sir why old depriciation is minus from new dericiation because the machinery is new and now the old machine has no role to play in present day operation,

[@sarthakpandey5564]

Yes bro I have same question Why old depreciation deducted from new depreciation?

[@shreyanshdhariwal6689]

Thanks of this video

[@muhammadarslan4761]

Boht barya love from pakistan

[@AsheES-w3n]

👍👍

[@Rajkumar-ss7if]

Thankyou sir :)

[@shreyanshdhariwal6689]

Sir u can add more questions in next video please

[@sambhavjain6404]

sir, I have a question. terminated cash flow why we didn't use the effect of capital loss

[@sarthakpandey5564]

Why old depreciation deducted from new depreciation?

[@sushilsharma4202]

@@sarthakpandey5564 Exactly, did that doubt got cleared?

[@harshitgarg9294]

Sir from which book you are giving questions ??

[@Ritik5951]

Sir...don’t we have to consider tax saving or loss in terminal cash flows?

[@ninjauserninja4818]

nope bro we dont consider the same should i tell the logic?

[@sheetalgupta3653]

@@ninjauserninja4818 yes plz tell me

[@mrunal6364]

@@ninjauserninja4818 yes please.

[@warriorofchess1865]

Sir 2nd question me .....tax saving amount add nai hoga kya.....pls help kro sir.....

[@ishvizz]

It was 40% on 2nd sum not 30% Tax

[@shalushankar4460]

Sir while calculating terminal cash inflow the answer is different just because of the selling off of the old machinery for the new one? Only in this case the answer will be adjusted? Because in previous question the old machine was also sold off bt was not adjusted with the new machine in the end.

[@ishansharma4656]

I have this doubt as well

[@ektasingh4452]

For the previous question scrap value was not given for the old machine, only the sale price was given. That's why it was subtracted. However, in the next question, we had a salvage value for both of the machines, that's why there was a need to adjust it. There is a difference between salvage value and sale price, for terminal flow we only consider the scrap value.

[@haroldhazard8504]

@@ektasingh4452 thx a lot🙏

[@vishalmakhijani2198]

@@ektasingh4452 in first question too Rs 4000 was given as salvage value of old machine. Now please explain as I have same doubt.

[@misha_goyal]

You are an excellent teacher sir, great work 😀 and thank you so much for helping us through videos😇

[@sarthakpandey5564]

Pls tell why old depreciation deducted from new depreciation.

[@misha_goyal]

@@sarthakpandey5564 because replacement ka concept hai isme, video ki starting dubara suno Sir ne clearly btaya h iska reason ki old se compare krenge new project ko

[@misha_goyal]

@@sarthakpandey5564 replacement krne se new machine se kitna additional cash flow hoga ye pta krna h islie jo purani machine se hoga vo subtract kroge tabhi additional pta lagega

[@misha_goyal]

@@sarthakpandey5564 additional depreciation = depreciation on new machine - depreciation on old machine

[@sarthakpandey5564]

@@misha_goyal thanks brother

[@nidhigoel302]

Sir is it not necessary to deduct old asset sale price in terminal cashflows as it is not deducted in book with same illustration..

[@CANareshAggarwal]

It may have been deducted from last year's inflow otherwise the solution is wrong.

[@nidhigoel302]

kk

[@kuldeepsharma1229]

@@nidhigoel302 say thanks No kk.. No manner how to reply

[@ashakumawat21]

Sir please Hume bhi financial management padha dijiye 2021 ki 🙏

[@yachikagarg]

Sir first ques mei ..28000 mei se 6000 less kyu kiya ?

[@kidsvr5430]

Kyunki net depriciation nikalna hai.28,000 mein 6000 ki depriciation already included hai

[@dream5632]

Ye additional income kase aaye sir questions 2

[@yogeshkataria2874]

Thnku sir

[@arpitsinghvi6589]

Additional Depreciation mein old machine ka Depreciation minus kyun kiya ? Add kyun nahi kiya ?

[@sarthakpandey5564]

Yes bro Why old depreciation deducted from new depreciation?

[@mynaamradheykhansoiloveyou5724]

sir please risk and return ka concepts ka video jarur Lana please please please sir.

[@RajKumar-jp2oq]

Sir, Which book you are teaching from

[@uditgoel5633]

Sir old asset ka depreciation galat nikala hua hai aapne

[@sujitkumar47]

thanks sir

[@kanishkkumar406]

Which book?

[@alexasaifi6459]

What book is this ?

[@sudhajaiswal9556]

Sir how to solve if there are two machines