in the textbook they have shown that we have to calculate the TAD and shown it as an addition in cash flow
DOUBT - could i subtract the depreciation then calculate the tax and then add back depreciation again or would would mark be deducted for doing so?
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4y ago#1That is the normal way of doing it in Paper FM just as I explain in my free lectures on investment appraisal with tax (and seems of course to be the way that your book is explaining).
sorry sir i did not quite understand your reply which is the normal way of doing it the one explained in the textbook where you calculate the TAD and show it as a cash inflow OR When you subtract depreciation and calculate tax and then add back?
DOUBT – would marks be deducted for subracting depreciation calculating tax and then adding them back again?
4y ago#3We subtract the TAD to calculate the taxable profit, We then calculate the tax. Then we add back the TAD to the cash flows because it is not a cash flow.
That is what your book says and that is what I explain in the lectures.
Have you watched the lectures? :-)
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