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APV

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › APV

  • This topic has 1 reply, 2 voices, and was last updated 7 years ago by John Moffat.
Viewing 2 posts - 1 through 2 (of 2 total)
  • Author
    Posts
  • May 12, 2018 at 3:17 pm #451494
    Isabelle
    Member
    • Topics: 17
    • Replies: 22
    • ☆

    Hi,

    I’m trying to get my head around APV and had a quick question about the financing impact.

    I understand that the 3 components in P4 I need to be aware of are:
    1. Issue costs
    2. Tax relief
    3. Subsidy loan costs

    I don’t understand why the interest cost itself isn’t a factor to be calculated rather than the tax relief. Am I missing something?

    May 13, 2018 at 7:33 am #451573
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54699
    • ☆☆☆☆☆

    The tax relief is the tax saving on the interest. According to M&M it is the tax saving on the interest that makes debt finance attractive.

    Have you watched my free lectures on this?

  • Author
    Posts
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  • The topic ‘APV’ is closed to new replies.

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