In a pricing basis it says if I>E net down I and E. However, acquisition expenses should be netted down at say 15%. Why are the acquisition expenses netted down at a lower rate? Is it to do with them being spread over 7 years?
the purpose of netting down is to allow for tax relief as tax relief rates will vary depending on when the tax will be actually paid , a discounting may be applied for timing differences. hence the 15% may be an assumed rate allowing for this.
