- This topic has 1 reply, 2 voices, and was last updated 1 year ago by
.
- Posts
Dear John,
I’d appreciate your help with understanding why the TAD and the after-tax synergies were not included in the PV calculation of Joshua Co‘s cash flows in the March / June 2023 (22/23 syllabus) question number 1 II? From the ACCA CBE platform.
Many thanks in advance!
Best regards,
MargaritaThe TAD has been ignored because the question says that it is equivalent to the amount of the investment needed to maintain operations . So although the TAD itself is not a cash flow, the investment needed is a cash flow of the same amount. The examiner does this in almost every NPV type question as I do explain in my free lectures.
The after-tax synergies have been included. The first table in appendix 2 does not include the synergies. However below the table the PV of the synergies has been calculated as being $27.9m and this has been added on the get the total PV.
- You must be logged in to reply to this topic.