APV

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May 12, 2018 at 3:17 pm #451494
Isabelle
Member
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Hi,
I’m trying to get my head around APV and had a quick question about the financing impact.
I understand that the 3 components in P4 I need to be aware of are:
1. Issue costs
2. Tax relief
3. Subsidy loan costs
I don’t understand why the interest cost itself isn’t a factor to be calculated rather than the tax relief. Am I missing something?
May 13, 2018 at 7:33 am #451573
John Moffat
Keymaster
- Topics: 57
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The tax relief is the tax saving on the interest. According to M&M it is the tax saving on the interest that makes debt finance attractive.
Have you watched my free lectures on this?
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