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John Moffat.
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Edinaeval
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Hello Sir
Please, when computing APV, is it an option for the firm to use 100% subsidized/cheap loan? If yes, would the tax savings then be discounted using the cheap loan rate or Kd?Also, I will like to know at what point the risk free rate of return is used to discount
John Moffat
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As I do explain in my lectures on this, there are arguments for discounting the tax saving at the applicable loan rate or at the risk free rate, and discounting at either rate gets full marks in the exam.
Edinaeval
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