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On foreign investment appraisal, why didn’t you deduct maintenance costs before getting taxable profit?? Thanks
I assume that you are referring to Example 4 in Chapter 9 of our free lecture notes.
I would actually agree with you that the maintenance does need subtracting. However the statement stating that an amount equal to the amount of tax allowable depreciation is required each year for the maintenance of assets is something that the current examiner has in almost every NPV question (whether foreign or not) and he always deals with it in the way that I do in my lectures (i.e. without subtracting it to calculate the taxable profit).
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