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APV

Zzee10y ago
Dear Sir When calculating the finance package of APV what is the rate we must use to discount the tax savings from debt? Is it the pre tax cost of debt or risk free rate??
John MoffatJohn MoffatTutor10y ago#1
In theory the two will be the same. In practice, the two are different and the examiner allows you to use either (even though the final answer will obviously be different). I do make this clear in the free lectures on APV :-)
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