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Hello sir, Hope you are doing well. Here are few of my questions regarding apv
1. is the benefit calculated the same as the npv calculated using discounted cashflow method
2. For Issues we will not factor it into the while calculating the npv since if we were to reduce it back it would be double counting. Is this correct?
3. For subsidy loan the tax saving is calculated as normal intrest rate and the beneift of the subsidy loan is added back at the end is this correct?
Thank you sir.1 If you are referring to the tax benefit on the borrowing, then this is discounted at either the normal cost of borrowing or at the risk free rate (the examiner always accepts discounting at either rate – I explain the logic behind each rate in my free lectures).
2. I don’t know what issues you are referring to.
3. The tax saving is on the interest rate actually paid.
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