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  • This topic has 3 replies, 2 voices, and was last updated 7 years ago by John Moffat.
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    Posts
  • November 9, 2015 at 7:30 am #281221
    alryami2009
    Member
    • Topics: 53
    • Replies: 36
    • ☆☆

    sir , in the answer of this question first why not start the adjustment of other costs from the year 1 inward why its start from year 2 .
    second why tax benefit in CA from capital expenditure not add back for every year , just include tax benefit from unrecovered capital allowance which is 3.68

    also the second part for the question in calculating sensitive analysis the figure ( unrecovered allowance .027 ) how its derived

    also in calculating duration why its start fro year 2 I mean not consider the negative cash flow in year 0 & 1

    November 10, 2015 at 8:21 am #281400
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 51551
    • ☆☆☆☆☆

    1. The outflows at time 0 and time 1 both relate to the capital investment. The other costs are only relevant for the post tax cash flows, which only start at time 2.

    2. The only error related to the capital allowances is the proceeds of sale (in note 4). The FYA and WDA each year will not be affected by this.

    3. it is 30% x the balance of 0.09 at time 6

    4. This is the way we always calculate the duration.

    November 19, 2015 at 12:55 pm #283931
    alryami2009
    Member
    • Topics: 53
    • Replies: 36
    • ☆☆

    thank you for your clarification , but why we deduct ( 1m from tax saving FYA .15 ( -.85 ) in year 0

    November 19, 2015 at 2:17 pm #283944
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 51551
    • ☆☆☆☆☆

    That is when calculating the sensitivity.

    The 1M is the extra capital expenditure (as per the question).

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