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John Moffat.
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humai
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Sir in this Qs how they have taken cost of debt as 5.3% which is interest on loan. Because in all other past paper Qs of WACC normally cost of debt and interest on loan are different
John Moffat
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If we knew the market value of the debt, the redemption date, and if 5.3% was the coupon rate of interest, then we would calculate the IRR in the normal way.
Here, we do not know the market value or have information about the redemption, and so we have no choice but to assume that the 5.3% is the pre-tax cost of debt.
humai
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