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if we see the answer from the examiner it says 20% tax benefit and then its being subtracted. can you please elaborate? I dont understand either of them.
many thanksThe ‘problem’ with this question is that we never know the revenue, but that will be the same however the items are sourced.
Profits are taxed, but that is a mix of both taxing revenue and giving tax relief on costs: costs are allowable for tax, so you can think of that is a tax benefit as the effective cost is lower than it would otherwise have been. Therefore the tax on costs is deducted to get the net, post-tax cost.
HTH
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