6. foreign investment appraisal . Example 4

because tax allowable depreciation is at the rate of 20% p.a.straight line and An amount equal to the amount of the tax allowable depreciation is required each year for the maintenance of non-current assets, I think it is better to take place into the account and hence the solution will change, because we should reduce TAD and Maintenance cost together as an allowable tax cost to calculate the taxable profit and for eliminate TAD effect must add back TAD to find out the Cashflow for every year

year 0 1 2 3 4 5
Revenue
Operating Cost
royallity
TAD 1000 1000 1000 1000 1000
maintenance 1000 1000 1000 1000 1000
taxable cashflow -615 -420 880 -125 -625
add back TAD 1000 1000 1000 1000 1000

tax 20% in Oblivia -123 -84 176 -25 -125
tax 25% in Uk 108.70 145.83 416.67 200.00 100.00

NPV= -1,462.53