Capital Budgeting - Accounting Rate of Return & Payback Period

[@girocortez7786]

Thank you for this Sir! God bless po. 😊

[@manjaresronalyn-fo9jj]

tenkyuu hahaha mababaliw nako ganto lang pala kadali

[@jemadiwata9694]

In computing the annual rate of return, is it a standard that we should use the Before Tax Cash Flow amount? Or if there is an income tax rate, we must deduct it first? Thank you, sir!

[@TobyUnravels]

The latter. i.e. if the business is subject to taxes, we should deduct them first. We use after-tax cash flows.

[@jemadiwata9694]

@@TobyUnravels Ahh. Okay, thank you sir!

[@patriciaisabelcayabyab9419]

Nice vid!

[@oliverjaimehermogenes5644]

In getting average investment, if the problem has salvage value, should we add it to the initial investment and then divide it by 2 or should we deduct it from the initial investment then divide it by two? Our module says in getting average investment the formula is initial investment minus the salvage value then divide it by 2. Which is true?

[@TobyUnravels]

It should be an addition From the name itself, average, you sum them up and divide by two :)

[@oliverjaimehermogenes5644]

@@TobyUnravels Thank you sir! More power to you!

[@AJlLopez]

Sir may i ask, what if we do have a salvage value? Should we consider it in answering the initial investment? Like. Adding it to the BTCF before deducting the depreciation

[@TobyUnravels]

You may watch Part 1 and Part 2 of this playlist

[@rizzavaleriearizo4422]

Sir, when calculating for the average investment, is it always initial investment divided by 2?

[@TobyUnravels]

Initial investment plus end of life book value all over two. Without a book value at the end of the life, it'll be zero

[@jemadiwata9694]

Why 800K + 0 , sir? in computing for the average annual investment. What amount must be added to the initial investment before dividing it with 2?

[@TobyUnravels]

The ending balance of the net investment is presumed to be zero. So Beginning (P800,000) and Ending (0).Take the average.

[@jemadiwata9694]

@@TobyUnravels Thank you so much sir! This helps me a lot. More power to you!

[@Miley_luvvs]

Thanks for this vid

[@lynjaraparcasio8744]

Can you please tagalog please, is it more understandable if you use our own language in teaching accounting subject.