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question about Sept / Dec 19 Q1 EVA

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA APM Exams › question about Sept / Dec 19 Q1 EVA

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  • July 15, 2021 at 4:26 am #627786
    winnielai119
    Member
    • Topics: 9
    • Replies: 7
    • ☆

    The answer showed “Lost tax relief on interest” is $53M, may I know how to calculate it?

    Thanks.

    July 15, 2021 at 1:50 pm #627849
    Ken Garrett
    Keymaster
    • Topics: 10
    • Replies: 10195
    • ☆☆☆☆☆

    Interest paid = 213.

    Tax rate 25%

    25% x 213 = 53.25, rounded to 53.

    If no interest had been paid (to get NOPAT), profits would be 213 higher….but tax would be 53 higher too.

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