20% off ACCA & CIMA Books

OpenTuition recommends the new interactive BPP books for December 2024 exams.
Get your discount code >>

ADJUSTED PV

This topic has 1 reply, 2 voices, and was last updated 13 years ago by 11ish.

Viewing 2 posts - 1 through 2 (of 2 total)

Author
Posts
October 24, 2011 at 6:59 am #50207
abbas ali
Member
- Topics: 9
- Replies: 57
IN CALCULATING TAX SHIELD ON DEBT.
WE ADD ISSUE COST ON DEBT OR NOT.
FOR EX 250,000 FOR DEBT AND ISSUE COST IS 2%
SO HOW WE CALCULATE THE TAX SHIELD?
TAX RATE 25%
October 27, 2011 at 5:12 am #89051
11ish
Member
- Topics: 1
- Replies: 14
There is a detailed example in kaplan on this. Nevertheless, you have to add issue costs. If you are assuming that 250k is NET of issue costs, it is 98% of the total debt you raise. What you actually raise is 250k * 100/98. Tax shield is then calculated on this amount.
Author
Posts

Viewing 2 posts - 1 through 2 (of 2 total)

You must be logged in to reply to this topic.