Dear Frenz,
I ve a doubt regarding Pre tax Discount rate & post tax discount rate.
Suppose my yearly lease rental is 10000(Pre tax).Discount rate 10%( pre tax).the present value for payment of lease rental at the end of year 1 is 10000/1.1=9090.91
Now lets assume tax rate to be 30%.so my post tax lease rental after considering tax saving 3000 is 7000.
Also my post tax discount rate 7% ie 10%*(1-.3).So my present value after tax for lease rental paid after one year is 7000/1.07=6542.
Can some one explain me ?is there in fault in my concept.why aint both figures same....wats my mistake?
CAclubindia
