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Dear John Sir,
In this question, we have a PRE-TAX PROFIT ON DISPOSAL of $27m-$25m=$2m and this is directly added to FORECAST POST-TAX EARNINGS. And this is strange to the core! Is there anything in the question that am missing out?
If you read the examiners notes below the calculations, he explains this:
“The profit from the sale of the assets for proposal 3, of $2,000,000, is assumed to be after tax. Answers which consider the profit to be before tax, and therefore only take into account $1,600,000 as the net profit, will receive full credit.”
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