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Financial Modeling Help Needed

  1. #1
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    Unhappy Financial Modeling Help Needed

    Hi all,

    I have used this forum in the past for many issues and always managed to get it solved thanks to the threads posted here. Now I am kind of lost on the following problem, registered to the forum and hope that you could help me with it. Regarding my background/ introduction: I am using Excel/ VBA mainly for work. I work at a bank and I am responsible for building and maintaining the Cash Flow Models used in the departments for financing various asset classes, among them Aircrafts, Infrastructure and Renewable Energy projects like the one where I have the following problem (I hope this is the right place and way to present my problem - if not: sorry). The search function unfortunately did not help me as I do not know what to search for, really.

    Here it goes: In the new French Tax Code, you have the option to deduct Interest Costs each year up to a threshold. So for example you have a Profit before tax of 1 Mio., you pay 500T in interests and the threshold is 3 Mio., s.t. you have a profit for taxation of 500T€. Now the remaining 500T of deduction capacity can be carried forward, but only over 5 years. So you have 500T€ extra deduction capacity for the following year, but the Code provides that you can only use this to offset the interest costs in that year, not other interest costs (which can also be carried forward if they are greater than the threshold). So any interest in a given year has to be offset against the carried forward capacity first, if that is depleted you can use the capacity for that period and so on. Interests from carried over can be offset against the threshold in that period, the remainder of which then becomes the new capacity to be carried over and so on. After 5 years or when the bucket is completely depleted, a new bucket no.1 can be started.

    Sorry that I cannot provide a file. I hope that someone maybe had the same problem and the explanation is understandable. My problem is mainly how to determine which buckets to use for which flows and when to close/ open new ones.

    Thanks in advance

    UF88

  2. #2
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    Re: Financial Modeling Help Needed

    Hi

    To solve your problem without a sample de-sensitised model is fairly difficult but maybe some advice might help.

    To build a model to determine the calculations needed I would draw a flowchart of all the decision points and the decisions to be made. This will provide a base to build a model spreadsheet using formulae to determine the cashflows.

    If you are familiar with flowcharting this will help in solving the issue if not then maybe a colleague in your computer department can or maybe an answer will pop up here.

    I had a question though What is deduction capacity. Is it the difference between the threshold 3 Mio and interest paid/deducted?

    I can give a go over the next week if no other responses are posted.

    Cheers

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