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The answer regarding this question seems to be wrong in the bbp exam kit because tax is calculated on capital allowances two times. firstly capital allowance are added in expense and tax is deducted. after that tax savings are added back
I think that if you check carefully then you will see that capital allowances are subtracted, then the tax is calculated, and then the capital allowances are added back.
That way of dealing with tax is fine. The tax itself is a cash flow, but the capital allowances are not a cash flow.
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