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INVESTMENT DECISION

Sir, In ill 32 there is savings in wages and savings in scrap, and the tax rate is 30%, isn't this savings leading to opportunity cost in the tax shield because it's an expense and also tax deductible so shouldn't find the difference of extra tax and take that as opportunity cost while calculating the PI.


aman kawad

aman kawad

CA Inter

7K+

27-Jun-20 18:32

29

Answers (4)

Do you mean illustration 32 about Alpha Company. Could you confirm the illustration please


sudha reddy

sudha reddy

Moderator

29-Jun-20 19:04

Sorry ma'am ill 13


aman kawad

aman kawad

CA Inter

7K+

29-Jun-20 19:07

Savings in scrap and wages is considered to compute PFAT, So tax effect on such savings is included in PFAT, which is used to compute PI. So there is no further scope of opportunity cost....


sudha reddy

sudha reddy

Moderator

29-Jun-20 19:40

Thanks ð???


aman kawad

aman kawad

CA Inter

7K+

29-Jun-20 19:45

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