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16 Question 7 (10 marks) Brenda Limited is proposing to launch a new product range....

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16 Question 7 (10 marks) Brenda Limited is proposing to launch a new product range. As part of this project, it must buy a new machine costing 200,000. The machine will be sold at the end of 4 years for 24,000. Company is eligible for capital allowances on all purchases of fixed assets, calculated at 25% on a reducing balance basis. The tax rate is 30%, paid or credited in the year when it is incurred. Required: a. Calculate the tax credits available to Brenda Limited for each of Years 1, 2, 3 and 4 arising from the capital allowances on the new machine. (6 marks) b. Explain how zero based budgeting technique is different from traditional budgeting? (4 Marks)

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