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f9 2008 june Question 4

This topic has 2 replies, 3 voices, and was last updated 13 years ago by John Moffat.

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July 15, 2011 at 10:18 am #49323
munthaliaunward
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Would you please assist me on how you calculated IRR (b) where we use straight line method, we are given 30% tax allowance but no capital allowance and how yoy calculated net cash flow of $246613 etc
November 8, 2011 at 9:32 am #85991
master-zuhayr
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For IRR you can use the gradient method ( 10%, +NPV) ( R, 0 ) ( 20% , -NPV ) it is a much easier method.
Revert back if u dont understand i have said
😉
November 19, 2011 at 10:07 pm #85992
John Moffat
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But you are told the capital allowances – they are straight line over four years, so given that the cost is $1M, the allowances are 250,000 per year (as in the answer).
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