So tricky!!!! Change in tax rate

CFA Level II
#1

Wow, I was calculating FCFF using : NI + Dep + Int( 1 - tax rate) - FCINV - WCINV

They tell you to use a higher tax rate = 35%. I could not get the right answer and realized that the NI was incorrect because it used an older tax rate (not disclosed).

GOSH!!!

So the answer must use FCFF = (EBITDA - Dep - Int)(1 - tax rate) + Dep - FCINV - WCINV

THIS GOT ME GOOD!!!

#2

That sounds quite unfair. Actually I doubt such a minute detail will be tested.

#3

The mocks are filled with these tricky small details… I also highly doubt these nuances will be tested on the actual as vignettes will be more clear to what they are asking for.

#4

so we hope! these type of instances have me sometimes overthinking questions when what they are asking is more general, and overthinking gets you into trouble.