1. Avatar of nkmile64 says

    I understand that when using actual (inflated) cash flows, we should discount with an actual (nominal) rate of return that includes the inflation premium, and not the real rate or event the bank borrowing rate that was used by the trainee accountant.

    But, since we’ve calculated after-tax cash flows, shouldn’t we also use an after-tax nominal interest rate? Shouldn’t we adjust the 12% figure provided by the Fisher formula for the tax effect? i.e. multiply by (1 – T) or 0.70 to get an after-tax nominal rate of 8.4%?

    • Avatar of johnmoffat says

      No :-)

      We bring tax into the cash flows simply because tax itself is a cash flow and we want to get the actual net cash flows.

      Then we discount at the actual cost of money. I don’t know if you have studied weighted average cost of capital yet, but when calculating the cost of debt we do indeed take account of the tax relief on the interest and calculate it after tax (but this has nothing to do with the cash flows themselves – it is simply that the tax relief on the debt makes the borrowing cheaper. However, dividends do not get tax relief and so the cost of equity borrowing is not affected by tax.

  2. Avatar of sgsii says

    Dear admins,

    There seem to be a playback problem for many people. Please fix it. Having tried different browsers on different devices (PC/Laptop/Phone/Tablet) both at work and home, I’m pretty sure it’s the website problem. Otherwise very helpful.


    • Avatar of opentuition_team says

      Not so many people I am afraid, You are in a small group, who happen to have some problems.
      I appreciate that you have tried different devices – still, you need to be more specific..
      for example, phone/tablet – was it android – with latest updates google removed flash player support and you have to install extra software to play again the lectures…

      at work – you are most likely behind a corporate firewall – so talk to your local administrator to enable video streaming.
      and sometimes ISPs also block video streaming

      I can’t and not going to cover every possible case for your video playback failure.. since I have no details,

      Please visit the support page:

      • Avatar of sgsii says

        Thanks for your reply. Like you I didn’t want to write a long essay with all details, but only to highlight the issue. I would like to think thatI have enough computer knowledge to understand the basics. But, no the problem is not with flash or firewall, as I can watch videos most of the time. But some days, like yesterday it would stop playing and keep loading for 15 to 30 minutes. Restarting browser, computer or even my router didn’t fix it. Just had to wait about an hour and a few unsuccessful attempts before I could finish the question.
        Tablet is iPad2, computers are Windows 7 (32 and 64 bit) adsl routers with all necessary permissions assigned in firewalls. Browsers used latest versions of firefox, chrome and IE. Mobile Samdung S4. Everything is up to date. Network speed 5-7mb dl 0.3-0.5 up, and at work double that.

        Again I don’t mean to be ungreatful as no payment is required for your service. Thanks again.

      • Avatar of opentuition_team says

        Hi, of course, we are annoyed if the videos do not work properly, does not matter if it is free or paid! :)
        thanks for follow up, at least it does say, that lectures did work :) so it’s not totally black hole

        we do not host stream videos from our bedrooms :) but use professional video streaming service with servers around the world.. and I suppose (well, it’s a fact) last few days there were lots more request than normal. since it’s exam time.. so maybe that explains your problems.
        however, there is nothing we can do about it, try it like you did, at different times, and in the future, do not leave it to the last minute before the exams.. start earlier..

        good luck in June exams

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