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Dear f9 toutor where did the 8,000 Taxation (at 30% in following
year) did come from? how to calculate & arrive at the same result?.for the Warden case requirement :(b)how to calculate and arrive @ Discount factor 17%
Please answer this questions for me?
With best regards
The workings for the capital allowance tax saving are show in the answer. The allowance in the first year is 25% x 320 = 80, and therefore the tax saving is 30% x 80 = 24.
The tax effects are all explained in my free lecture on relevant cash flows for DCF. (The lectures are a complete free course for Paper F9 and cover everything needed to be able to pass the exam well!)
With regard to the question Warden (although in future please start a new thread when it as asking about a different question!):
The 17% is simply a second guess, as is always needed if you are asked to calculate the IRR. You could have chosen 18% or (as I would have done) 20%.
Again, I really do suggest you watch the free lectures. You cannot learn the topics only by working through past questions. You must either watch the lectures, or (if you do not want to watch the lectures) buy a Study Text and work through that. Only then does it make sense to work through past exam questions.
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