chine could be purchased for £800,000; it would be used for 3 years and then sold for £580,000. It would qualify for capital allowances at 18% reducing balance basis with a balancing allowance or charge on disposal. The company pays tax at 20% and has a cost of capital of 10%. What is the tax cash flow at time 3, to the nearest £100? A £8,400 inflow B £8,400 outflow C £19,365 inflow D £19,365 outflow
chine could be purchased for £800,000; it would be used for 3 years and then sold for £580,000. It would qualify for capital allowances at 18% reducing balance basis with a balancing allowance or charge on disposal. The company pays tax at 20% and has a cost of capital of 10%. What is the tax cash flow at time 3, to the nearest £100? A £8,400 inflow B £8,400 outflow C £19,365 inflow D £19,365 outflow
Chapter9: Capital Budgeting And Cash Flow Analysis
Section: Chapter Questions
Problem 5P
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A machine could be purchased for £800,000; it would be used for 3 years and then sold for £580,000. It would qualify for capital allowances at 18% reducing balance basis with a balancing allowance or charge on disposal. The company pays tax at 20% and has a cost of capital of 10%. What is the tax cash flow at time 3, to the nearest £100? A £8,400 inflow B £8,400 outflow C £19,365 inflow D £19,365 outflow
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