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what is the effect on the calculation of WDA if either investment is made at the start of the year or or at the end of the year?i-e,in what circumstances,the claim of WDA will be made from year 0?
You must watch the free lecture on investment appraisal with tax, where the timing of the tax flows is explained – I cannot type out the whole lecture here.
In the exam the investment is virtually always at the start of the year (which is time 0).
The WDA is calculated at the end of the year (which is time 1).
If the question says that tax is paid immediately then the first tax saving is therefore at time 1.
If the question says that there is a one year delay in tax, then the first tax saving will be at time 2.
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