Ty Korrigan Posted July 5, 2005 Share Posted July 5, 2005 Investment is paid by the profit I make. So for instance does a simple sum like this make sense?I have materials costing 10k with a life of 10 years, which in 10 years will cost 13k to replace.So to pay for this, must I earn 13k plus the tax on the profit? ( say 50%) so in fact to replace my 10k investment requires 19.5k of actual taxable profit.What say the learned...? Link to comment Share on other sites More sharing options...
Poppy Posted July 5, 2005 Share Posted July 5, 2005 Did you foget the cost of maintenance and replacement/labour for parts over ten years or does your equipment run trouble free for that number of years.We understand and sympathise fully.Jan Link to comment Share on other sites More sharing options...
Ty Korrigan Posted July 5, 2005 Author Share Posted July 5, 2005 Hello, please just assume these are values of investment only. Other costs are irelevant for my example Ta very much! Link to comment Share on other sites More sharing options...
Outback Posted July 5, 2005 Share Posted July 5, 2005 There is also the "opportunity cost" of not investing yourmoney in something else. If you were working for someone else and using their kit you would have been able to invest the money instead , at least in an interest bearing account and probably even get a better return with shares and the like. This is in effect the "hire charge" for the money whichyou should be hiring to yourself for at least the same as thelowest return you could get elsewhere.Also don't forget to account for end of term residuals and capital allowances which should be available even in FranceBTW Don't want to sound pedantic but it's "recouping an investment", recuperating is what you do after an illness. Link to comment Share on other sites More sharing options...
Mpprh Posted July 6, 2005 Share Posted July 6, 2005 HiA simple example, but not so easy to answer !Normal accounting standards would depreciate the 10,000 cost over the 10 years and ignore replacement cost. It would also ignore inflation. This is the basis for taxation (subject to any accelerated capital allowances available).To analyse this project, you would probably use Discounted Cash Flow analysis. This reflects the cost of capital, and measures the +ve flow at the end of the project. It is normally used with a cut off for investment decisions or in comparisons with various available projects.You can IM me for more information !Peter Link to comment Share on other sites More sharing options...
Ty Korrigan Posted July 6, 2005 Author Share Posted July 6, 2005 Ah! 'recouping' abit like re-home-ing a chicken then!I shall e-mail for further info... after I have cut more grass with some of my investment! Link to comment Share on other sites More sharing options...
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