Tax

This topic has 3 replies, 2 voices, and was last updated 8 years ago by John Moffat.

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August 27, 2017 at 4:58 am #403716
khuramch
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Pre tax means value befor tax

After tax means value after deduct tax..

But one of BPP mcq# 113..
i correctly calculate future value of 2 years..

But dont understand what happend in tax calculation..pre tax value simply means value from which we currently not deduct the tax then why BPP divide (1-.3)

Plz explain it sir
August 27, 2017 at 10:40 am #403738
John Moffat
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For every $100 pre-tax, the amount after tax will be 100 x (1 – 0.03) = 70.

So for every 70 after tax, the amount before tax will be 100, or 70 / (1 – 0.3)
August 28, 2017 at 3:06 am #403834
khuramch
Member
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Well Really thanks for your continuous replies..

Sir i now how to calculate pre and post tax..

Point is Currently we are not workout to any tax situation..

So;
This is only a future Value(Pre tax value)=127050
Tax(30%)=38115
Post tax Value=88935

So 127050 is only use as a post tax value…if we already payed tax on this value..but we are not..

Plz Help me where you find me wrong..
August 28, 2017 at 7:58 am #403869
John Moffat
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For the PV of the revenue to be the same as the PV of the net of tax costs, the after tax revenue needs to be 127,050.

Since this is what is needs to be after tax, it needs to be 127050/0.7 = 181,500 before tax.
The revenue is taxable.
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