When do we have to consider tax benefit on various items such as initial cost, depreciation, interest payment. There are some questions of capital project appraisal where this is considered even when the question was silent about it.
I can think of very few CT2 exam questions where this aspect gets discussed. You mention the tax benefits of the initial cost, but I dont see where the initial cost generates a tax benefit. Also, the impact of the tax efficiency of debt (interest) would normally be brought into the calcs through the WACC, which includes the "net" cost of debt rather than the gross cost. Depreciation of an asset (or capital allowance as it is called in the tax accounts) does generate a tax efficiency, but I dont know of any questions where that has been investigated.
