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Hi sir, for March/ june 2016 exam question 5 part (b) .
My workings are different from the answer key.
The tax allowable depreciation will only continue until year 10 right. So i have taken
Y5 – Y10 Y11- infinity
2129800 2017800
DF: 2.787 3.202
PV 5935753 6460996
Therefore increase in NPV of extending production to Y5 and for the foreseeable future
= 5935753 + 6460996
= 12396749Are my working correct ?
Yes – thats fine. The small difference is due to rounding in the tables!
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