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Sir,
May I know why interest expense is not in the calculation of the present value of cash flows for Anatara? Is it because the effect of interest is already in the cost of capital used in discounting?
Yes! We never include interest in the cash flows when we are discounting at the WACC, because (as you have written) the cost of debt is included in the calculation of the WACC. If we included interest in the cash flows we would be accounting for it twice 🙂
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