APV

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November 16, 2020 at 3:50 pm #595207
aamir2111
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Dear Tutor,

In APV, when we calculate the PV of tax benefit, should we be discounting it at the “Debt holders’ required rate of return” or should it be the “Company’s cost of debt”?
November 16, 2020 at 4:22 pm #595215
John Moffat
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It is either at the debt holders required rate of return, or the risk free rate.

The examiner always accepts either because there are good arguments for both, as I explain in my free lectures.
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