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Good Afternoon sir,
I hope you are well.
I hope you can help me with my little dilemma. I get really confused with which kind of cost of capital to use on questions with different scenarios (Lease or Buy, MV of Loans etc.). They are all scattered in the lectures and it is difficult to remember whether to use pre or post tax cost of capital.
Can you kindly give a summary of all the different scenarios and state if the cost of capital to be used is post or pre tax.
Thank you, sir.
Your lectures are amazing and they are a great help for self study working students like me.To give a summary of all the different scenarios would mean typing out all my free lectures and I am certainly not going to do that!!!
We always use the after-tax cost of capital in all situations involving investment appraisal (unless obviously the question says to do different).
We always use the pre-tax cost of debt when calculating the market value of debt, because it is investors who determine the market value.
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