[saurabhsrinivasan]

First see which rate has the highest difference, fixed or variable, in the question you have mentioned, the fixed rate has the highest difference.
Then see which party is able to get the cheaper rate in the rate having highest difference.

Buryecs is able to get the fixed rate cheaper than the counterparty, so the fixed rate is taken.

[saurabhsrinivasan]

There are two ways to work it out.
1) First you deduct TAD to arrive at Profits before tax and then do the tax calculation, then add back TAD to Profit after tax to arrive at cash flows
2) Another method is to just adjust the TAD while computing Tax instead of showing it in the main cash flows calculation.
The net effect of above two is only to reduce the Tax charged by the amount of Tax on the TAD amount.

Eg: PBDT – 100, Tax – 30%, TAD – 20

1) Profits before tax = PBDT (-) TAD = 100 – 20 = 80; Tax = 80*30% = 24, PAT = 80-24 = 56, Cash flow = PAT + TAD = 56+ 20 = 76
2) PBDT = Cash flow from operations = 100, Tax = Tax on the cash flows (-) Tax on TAD = (100*30%)-(20*30%) = 30(-)6 = 24, Net cash flows = Cash flows from operations (-) Tax = 100(-)24 = 76.

Net answer is same in both case 🙂

[saurabhsrinivasan]

write lots of mocks and do a critical evaluation of the answers, preferrably get it marked by a good tutor or expert who can advise what changes/improvements you need to make to the approach. Main thing is the writing style, following the required format, concise language.

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