Sir can u please tell why have we discounted subsidized loan benefit by annuity factor of 1_4 as we have not discounted subsidized loan benefit in any of the previous questions of APV like burung co i understand for tax relief we discounted at 2_5 annuity factor but why to multiply subssidized loan benefit by 3.546
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Tippletine co march/june 2018
6y ago#1Both Tippletine and Burung have wealth with the subsidy benefit in the same way. In both questions they get the interest saving for 4 years and so in both cases it has been discounted by multiplying by the 4 year annuity factor (at 5% in the case of Tippletine and at 4% in the case of Burung).
why annuity minus 1st year discount rate
6y ago#3I assume you are referring to the tax relief.
If so, then because the tax is one year in arrears then the tax benefits are from years 2 to 5 and the discount factor for 2 to 5 is the 5 years annuity factor less the 1 year discount factor.
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