[frantisek]

thank you

[frantisek]

OK, thank you!

When is actually tax relevant? When do I need to strip out the interest of tax?

[frantisek]

Dear John,

just a quick question. The answer to this question says:

current EPS = share price QPE ratio = $4.00 Q15.24 = 26,25c
number of shares = $2,000,000 Q50c = 4 million

Can you please advise what is meant by those “Q”?

Many thanks.

[frantisek]

Sorry, I found out the answer on the previous question.

I have another question on this one. The exercise says: “Tax allowable depreciation is available on the cost of the machine at the rate of 25% per annum reducing balance. A full years allowance is given in the year of acquisition but NO TAX ALLOWABLE DEPRECIATION IS AVAILABLE IN THE YEAR OF DISPOSAL. The difference between the proceeds and the tax written down value in the year of disposal is allowable or chargeable for tax as appropriate.”

But they calculate tax benefit on depreciation for each year incl. the year of disposal.

Can you please tell why is that? I do not quite understand what they mean by saying that tax written down value is allowable or chargeable…

Many thanks!!

[frantisek]

Can you please advise why is in this case annual depreciation calculated from the purchase price (360,000) and not from purchase price less scrap value (340,000)?

[frantisek]

Thank you! I got it.

[frantisek]

Hi,

can you please explain why the book says that finance cost saving is 1,140 x 8%? It is unclear to me why it does not take into account receivable days ((3,800/15,600)x365). In my opinion the company only draws overdraft for the time receivables are outstanding and they are not outstanding entire 365 days, but 88,9 days, so the cost saving should be approx. 4 times lower.

Thank you.

[Author]

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