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present value

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FM Exams › present value

  • This topic has 1 reply, 2 voices, and was last updated 9 years ago by John Moffat.
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  • September 21, 2015 at 11:33 am #272625
    Ryan
    Member
    • Topics: 31
    • Replies: 42
    • ☆☆

    Hello sir.cud u tell me if this is right
    A company receives a perpetuity of $20000 p.a in arrears and pay 30% corporation tax 12 months after the end of the year to which cash flows relate.at a cost of capital of 10% what is the after tax present value?

    20000/0.1=200,000
    200,000×30%=60000x.909(10%)=54540
    200,000-54540=$145460

    September 21, 2015 at 5:12 pm #272666
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54659
    • ☆☆☆☆☆

    Yes – that is correct 🙂

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