Practice question 9 Ballet Plc in Revision Notes

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September 8, 2015 at 8:38 pm #270528
Marianne
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John,
Can you please explain why the capital allowances are accounted for when calculating the NPV of the project. I thought it was only the tax saving that is included when calculating NPV, although this question does seem a bit different.
September 9, 2015 at 7:36 am #270570
John Moffat
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The answer has done it the normal way.
Tax has been calculated on the operating flows (given that this question has negative operating flows, this results in a tax saving), and separately the tax saving on the capital allowances has been calculated.
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