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Hi Mr John
At the question 32 ( Drink Co) on ACCA past exams .
I don’t understand why they count to year 5 , not 4 year when it shows ” expected life is 4 years” in the question .
Thank youAlso. Can you pls explain the calculation of $6900 for their service cost tax benefit. I don’t know how to calculate to have that number .thank you very much
The flows from the machine last for 4 years but because the tax is one year later, so the tax flows occur at time 5 also.
The service costs are $23,000 per year. They are tax allowable and so they give risk to a tax saving of 30% x 23,000 = $6,900.
Have you watched my free lectures on lease and buy, and on investment appraisal with tax?
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