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Sit there was a NPV ques in exam in which profit/loss was given for 4 yrs ..and then depreciation and amortization was also given .. So we add back these two to get cash flows ..but there was also a corporation tax of 20% ..so we calculate tax on CASH Flow figure that we have calculated ..and not on the profit/loss given in the ques ..right ?
I cannot give you a definitive answer because I have not seen the question.
However the tax is calculated on the taxable profit as always. This would be the profit given in the question unless details of tax depreciation were given in which case tax is calculated on the cash flows less the tax depreciation.
Yes tax allowable depreciation was given as – 100% of the cost ..receivable immediately.. Tax rate was 20%.
So tax benefit of cost*20% will be there at time and then tax payable will be 20% of cash flows
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