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GOOD DAY SIR
Ndege Co can claim 10% tax allowable depreciation on its non-current assets. It can be assumed that the amount of tax allowable depreciation is the same as the investment needed to maintain Ndege Co’s operations.
Sir how to treat the above note When finding Free cash flow
In my opinion. Deduct TAD to arrive taxable profits and then ADD back TAD since it is not cash flow and then finally deduct Investment needed to maintain operations. correct me if I am wrong
Given that the investment needed is the same as the TAD, you would be adding back and then subtracting the same amount. If you do this then no problem – you would still get the same answer and get the marks.
I do mention this in my free lectures because it is a statement that the examiner has in most questions involving discounting.
well understood
I have watched all of your lecturer videos. and they are the best of the best. The best thing I have seen in your lecturer videos is that you do not just give us rules but also the logic behind it.
Thanks John.
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