tax tiiming

I understand you are doing a lot - but I have to support all students fairly Take a really simple example 1000 pa - 30% tax In year /////////1 ////// 2 ///// 3 PBT 1000/// 1000//// 1000 Tax 300 /// 300 //// 300 Delay a year The NPV becomes 4 Years /////////1 ////// 2 ///// //3////////4 PBT 1000/// 1000//// 1000 Tax 00000////300 /// 300 //// 300 Another example: Pays taxation one year in arrears at an annual rate of 25%. Year //////////////1 ////// 2 /////// 3 ///// 4 //// 5 //// 6 various at $000 Cash inflows (1-5) 700.4 //721.4// 743.1 ///765.3///788.3 Tax on cash inflows (2-6)//////// 175.1 //180.4 // 185.8// 191.4 // 197.1 net cashflows (1-6) 700.4 //546.3// 562.7// 579.6//596.9//(197.1)

time 0? what does it mean CF on first day of accounting period and last day ?

It means to is today t1 is the end of this first year and so on The only things that will be in to will be Investments WC in advance Lease payments in advance etc

Cash flow on the first day of the accounting period refers to a cash flow that occurs at the beginning of the year. It is assumed that all cash flows in the NPV question occur on the first day of an accounting period unless stated otherwise. On the other hand, cash flow on the last day of the accounting period refers to a cash flow that occurs at the end of the year. The timing of the cash flow, whether it is on the first day or the last day, determines the timing of the tax effect. If the first cash flow is on the first day of the accounting period, the tax effect is at Time 2. If the first cash flow is on the last day of the accounting period, the tax effect is at Time 1.

Hey , Thanks alot , results came in today , and I passed three of them ..

Well done you That’s great news

thank you!