In the base case net present value calculation of Project Alpha, why didn't they add back tax allowable depreciation after reducing tax from taxable income? Am I losing my mind?
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Okan Co (September/December 2019 – Sample Questions)
5y ago#1We only add back the TAD if it has been subtracted in the summary of the cash flows (the first part of appendix 2(a) in the answer).
Here (as is more usual in Paper AFM as I explain in my free lectures) TAD has not been subtracted in setting up the cash flows and the tax flow is calculated as separate workings.
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