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Dear sir,
I have a doubt regarding Tramont Co. (Dec 2011)
The contribution on component is calculated in the APV workings, but not considered in the NPV calculation. Why is that so?I ask this, as Washi Co. (Sept 2018) had a similar adjustment, but it was considered in the NPV.
Also, why do we consider contribution after tax? Is it possible to put it in the cash flows before taxable profits and then tax them or is it incorrect?
Thanks
I don’t know which answer you are looking at, but the examiners answer shows it as part of the all-equity NPV before the adjustments to arrive at the APV.
It doesn’t matter where you show it – the final APV will obviously be the same.
It doesn’t matter whether you show the full contribution and then the tax on it, of just the contribution after tax – the end result will again be the same.
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