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Good evening, Sir.
I have few questions regarding Tippletine’s APV.1. As I practice questions related to APV, I realised that only Tippletine requires the calculation of tax relief loss. I do not understand the purpose of such calculation. Kindly explain in detail.
2. Why is the annuity factor of 3.546 (Year 1 to 4) is used instead of 4.329-0.952 (Year 2 to 5) is used in benefit of sub loan?
I would appreciate if you are willing to allocate your time on answering both questions above.
Thanks and Regards.
1. A tax loss could appear in any question. The question says that ‘any tax losses can be assumed to be carried forward and written off against future profits’. So then there is a tax loss there is no tax payable, but the amount of the loss reduces the taxable profit in the following year.
2. The benefit of the subsidised loan arises at time 1 to 4. The tax saving on interest is 1 year later (so 2 to 5) because tax is payable with a one year delay.
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