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About problem 1, I am totally clear now.
About 2 and 3, can I say capital allowances are available as soon as the capital investment is made. So, in this Q, the first allowance incurs in Year 0 rather than Year 1. Am I right?
Thank you very much!
I cannot open a new forum post due to duplication, so I put questions here hoping you to give me guidance. I am appreciated if you can help me.
Your business J09 (a)
This question focus on the tax savings on capital allowance. I have two problems:
(1) indirect allocated costs are not relevant. I think the allocated costs are relevant to the project and should be deducted from the cash flows. So we should do nothing about them.
(2) the first year allowance takes place in year 0. Does it mean that all the capital allowance takes place at the year when the capital is invested.
(3) one more problem, please. The depreciations start from the year when the asset is bought no matter whether it is used or not,right?I’ve done Your business (J09) and this question focuses on the tax savings on capital allowance. I have two problems:
(1) indirect allocated costs are not relevant. I think the allocated costs are relevant to the project and should be deducted from the cash flows. So we should do nothing about them.
(2) per answers, the first year allowance takes place in year 0 rather than Year 1. Does it mean that all the capital allowance takes place at the year when the capital is invested.
(3) one more problem, please. The depreciations start from the year when the asset is bought no matter whether it is used or not,right?Sorry, the question I proposed is so broad. I just find many past questions covering FCF or FCF to equity. And there is only a small area in the Chap 11 of the lecture talking about FCF.
Oh,I understand it. Because it is the growth of earnings that determines the growth of dividend, g in the DVM is 12%. And P0=D0(1+g)/(Ke-g), to ensure P0 >0, (Ke-g)must be positive, so Ke >g.
Thanks! John, you help me a lot.So, it is not a new definition but a precise one. I understand it now. Thank you very much.