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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FM Exams › ASOp CO dec 09
In this question,
cash flow of financing is discounted at cost of debt and
cash flow of benefits are discounted at WACC.
i have seen this only in this question, they are using 2 different discount rates to find NPV.
why they discount it at cost of debt ?
After tax cost of borrowing is used when you purchase or lease an asset,
but when accepting a proposal of an investment is in question, we use the WACC
Correct 🙂
(It is only lease buy questions where this problem appears)