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Can u explain that while calculating the interest rate parity isn’t Mehgam the base country ? so why are we using 8 % for overseas country and 2% for base country?
can u also explain the balancing adjustment for machinery it says itll be sold for 500m so why are we adding 125m in the last year??
thanks
The MP is quoted against the $, so $ is the base country and Mehgam is the other country.
Have you watched my free lectures on this?
The balancing charge or allowance is always the difference between the sale proceeds and the tax written down value. The tax written down value is 1250 – (5 x 125) = 625.
Therefore there is a balancing allowance of 625 – 500 = 125.I do suggest that you watch the Paper F9 lectures on investment appraisal with tax.
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