*Sorry
I've found it that its because the amount tax allowable depreciation is the same as the investment needed. Didn't read that note first time round.
With regards to calculating the value of Ndege co.
The examiner has deducted the tax allowable depreciation from the PBDT to find the PBT
He used the PBT to find the tax amount
He has then deducted the tax amount and concluded that the amount remaining is the free cash flow.
My issue is, why has he not added back the tax allowable depreciation? Thats not a cash flow right? Its just an adjustment made to find the tax figure.
Thanks
Ask the Tutor ACCA AFM
June 2014, Qn 3C- Sorted now
7y ago#1You have answered your own question :-)
It is something that the current examiner does in almost every NPV question (which is why I explain and stress the point in my free lectures!).
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