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Adjusted present value

This topic has 3 replies, 2 voices, and was last updated 7 years ago by John Moffat.

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July 3, 2018 at 11:53 am #460815
Saimon
Participant
- Topics: 123
- Replies: 55
sir,
For calculation of PV of tax shield on interest,
in Kaplan text book it was said that , all financing cash flows are low risk they are discounted at either
– k(d) or
– risk free rate
my question is does this K(d) indicate rate of normal borrowing or subsidised loan????
July 3, 2018 at 2:35 pm #460826
John Moffat
Keymaster
- Topics: 57
- Replies: 54835
Normal rate (pre-tax, of course).
July 3, 2018 at 4:07 pm #460846
Saimon
Participant
- Topics: 123
- Replies: 55
December 2006 Tampem Inc, Requirement a
Sir,
In calculation of tax saving on tax allowable depreciation, in 4th year (which is last year) examiner have calculated TAD based on “applying 25% on WDV” but shouldn’t it be calculated by “deducting realisable value from WDV”
Can you please check this out and explain me the reason????
July 4, 2018 at 8:38 am #460919
John Moffat
Keymaster
- Topics: 57
- Replies: 54835
It is because of note (ix) in the question – it says that the value is after tax as a continuing operation. So the investment is not actually being sold (it is a continuing operation) and the amount is after any tax implications.
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