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Why is tax not deducted in the calculation of the market value of the loan note?
As I stress in my lectures (because it is so common in the exam) it is investors who determine market values, and they are not affected by company tax.
Tax is only relevant when calculating the cost of debt to the company, because the company gets tax relief on the interest.Please watch my free lectures. They are a complete free course for Paper F9 and cover everything needed to be able to pass the exam well.
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