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John Moffat.
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AFNAAAN
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while finding mv of debts should ve use b4 tax cost of debt or after tax cost of debt for dicounting the cfs?
and while finding mv the interests are its cf ryt, interest how should v record?direct interest amount or interest after deducting tax??
John Moffat
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It is the investors who determine the market value and they are not affected by company tax. Therefore we use the future receipts before tax and we discount at the investors required rate of return (which is effectively the cost of debt before tax).
This is often asked in the exam which is why I stress it in my free lectures!
AFNAAAN
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