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Hi John
cost 150 000, the project will last 2 years.it pays corporation tax of 30%. the machine attract 100% tax allowable depreciation immediately.
Given cost of capital of 10%, what is minimum value of the pre-tax contract revenue receivable in 2 years to recover the net cost?
please in other words what exactly is the question? i just dont understand.
thxYou need to calculate the present value of the flows that you are given, and then calculate backwards to find the revenue that gives the same present value.
Surely the book in which you found this question also gives the answer to it? (If not, then you should be using one of the books from the ACCA approved publishers!)
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