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Tippletine co

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › Tippletine co

  • This topic has 4 replies, 2 voices, and was last updated 5 years ago by John Moffat.
Viewing 5 posts - 1 through 5 (of 5 total)
  • Author
    Posts
  • November 26, 2019 at 8:58 am #553795
    pearluwera
    Member
    • Topics: 8
    • Replies: 7
    • ☆

    Hello Sir ,
    Help me on the subsidy benefit
    This is my way help know we’re am going wrong
    Subsidy befit
    30.6 *(4.329-0.952)*(0.05-0.022)*(0.7)=2.03

    November 26, 2019 at 9:05 am #553797
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54700
    • ☆☆☆☆☆

    You need to keep the interest saving and the tax effect separate, because there is a 1 year delay on tax.

    So the subsidy ignoring tax is from years 1 to 4, so just use the 4 year annuity factor for this.

    However the tax on it is from years 2 to 5, and for that the discounting is as you have written.

    November 26, 2019 at 9:19 am #553799
    pearluwera
    Member
    • Topics: 8
    • Replies: 7
    • ☆

    Thank you Sir ,now it is so clear

    November 26, 2019 at 9:40 am #553801
    pearluwera
    Member
    • Topics: 8
    • Replies: 7
    • ☆

    Hello Sir also help me on the tax shield on the loan
    How did the examiner derive this (0.025-0.003)

    November 26, 2019 at 4:41 pm #553840
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54700
    • ☆☆☆☆☆

    The question says that interest would be payable at 30 basis points (i.e. 0.03) less than the risk free rate of 2.5%.

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