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Hi John,
In this question they have operating CASHFLOWS of Poynins Co to be $36m, in the study text, they have said OPerating cashflow = Net operating profit – tax + dep, so I thought the operating cash flow value of $36m was already after reducing tax, so I found the value of Poynins Co, by reducing the IAI.If I state my assumption, will I get marks?
I am surprised that you book says that, because generally (in investment appraisal question) the operating cash flow is the cash flow before interest and before tax (unless obviously the question specifies differently).
You would therefore lose marks but not many, and you would as always get full marks for everything else that was done correctly on your figures.
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