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ACCA f9 paper sep-dec17 Q32A, i don’t know how to calculate the after tax benefit of tax benefit for year 4.
calculate assumed terminal value at the end of fourth year of 5% of the initial investment cost???In the final year there is a balancing allowance or balancing charge of the difference between the disposal value and the tax written down value.
The disposal value is 5% x 25,000 = 1,250
The tax written down value = 25,000 – 6,250 – 4,688 – 3,516 = 10,546.
Therefore there is a balancing allowance of 10,546 – 1,250 = 9,296.
Therefore a tax saving of 9,296 x 30% = 2,789
I do suggest that you watch my free lectures on investment appraisal with tax. The lectures are a complete free course for Paper F9 and cover everything needed to be able to pass the exam well.
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