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hi i want to ask for Hebac co past year question. Why the answer are not the same as format for NPV that I learn?
In the answer they calculate tax @ 20% for Year 1 and put in column Year 1, while my format says that tax for year 1 should be put at year 2?
So which one is correct?
The examiners answer is correct!!
The question says that tax is settled in the year in which it arises. Therefore the tax for year 1 is payable at time 1.
It is when the question says that there is a one year delay in paying tax that it would be at time 2.
Have you watched my free lectures on investment appraisal with tax? The lectures are a complete free course for Paper FM and cover everything needed to be able to pass the exam well.
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