The terminal value approach ( T v ) even more distinctly separates the timing of the cash inflows and outflows. The assumption behind the I V approach is that each ,cash inflow is reinvested in another asset at a sertain rate of return from the moment it is received until the termination of the project. Consider Example 10.8. Original outlay, Rs 10.000 life of the project, 5 years; Cash in lows, Rs 4,000 each for   years and Cost of. capital (11), 10 per cent  Expected interest rates at’ which cash inflows will be reinvested: 1

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