§ Mr. BlizzardTo ask the Chancellor of the Exchequer what the value is of the threshold of profitability referred to in paragraph five of the paper he published as part of his letter to the hon. Member for West Aberdeenshire and Kincardine (Sir Robert Smith) of 8 May. [57932]
§ Dawn PrimaroloThe threshold of profitability referred to in the paper is not a cash figure. It is based on a measure of profitability expressed as the ratio of net present value to the pre-tax cost of the investment. The precise threshold of this ratio up to which net present value of projects is improved depends on various factors such as the discount rate used by the investor. But in general, projects below the threshold are likely to be the more marginal ones; those above threshold the more economically attractive ones.
373W