Adjusted present value

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August 1, 2018 at 5:25 am #465485
richardscully
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Dear Sir..

Can you say why the tax relief of the amount between the interest paid and Ke is added and not the tax relief of the interest paid? The formula includes (1-t)(Kei -kg) Vd/Ve…..should it not simply be (1-t)Kd (Vd/Ve)?

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August 1, 2018 at 8:25 am #465497
John Moffat
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I assume that you are referring to the MM Proposition 2 formula (which is not directly related to APV). The formula is given on the formula sheet, and you are not required to prove it!!
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