Accounting income is just another name for Net Income. What is the point of confusion? What you are writing as (S-C-D) = EBIT and EBIT(1-T) = NI.
I’m thinking that maybe “Beginning Market Value” in the Schweser example is analogous to the “Initial Capital Outlay” in this problem meaning that if Schweser did (pre-tax cost of debt)*(BEGINNING MARKET VALUE)*(weight of financing), and instead of beginning market value being the basis, here it’s the initial outlay? Dunno.
rellison --how can that be if the schweser Q explicitly says that outlay for the project is 200k. cpk – the confusion is in regards to the calculation of interest expense in sample 3 q 14 vs. schweser book 3 pg 37. in the former: (project cash outlay) x (pre-tax interest rate) x (weight of debt) in the latter: (Market Value at beginning of year) x (pre-tax interest rate) x (weight of debt) the initial project outlay of 200K is ignored for this calculation
bump–i posted this late last night and its important i think