• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
Free ACCA & CIMA online courses from OpenTuition

Free ACCA & CIMA online courses from OpenTuition

Free Notes, Lectures, Tests and Forums for ACCA and CIMA exams

  • ACCA
  • CIMA
  • FIA
  • OBU
  • Books
  • Forums
  • Ask AI
  • Search
  • Register
  • Login
  • ACCA Forums
  • Ask ACCA Tutor
  • CIMA Forums
  • Ask CIMA Tutor
  • FIA
  • OBU
  • Buy/Sell Books
  • All Forums
  • Latest Topics

20% off ACCA & CIMA Books

OpenTuition recommends the new interactive BPP books for September 2025 exams.
Get your discount code >>

Coeden Co

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › Coeden Co

  • This topic has 3 replies, 2 voices, and was last updated 1 year ago by John Moffat.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • January 24, 2024 at 8:03 am #698975
    konain03
    Participant
    • Topics: 4
    • Replies: 2
    • ☆

    In this question, why have we used post tax cost of debt (4.9%) to calculate MV of debt? When discounting cashflows from redeemable debt for calculating MV of debt, shouldn’t we use YTM (pre-tax kd) which would be 6.125?

    January 24, 2024 at 9:19 am #698978
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54720
    • ☆☆☆☆☆

    No. The 4.9% is the pre-tax cost of debt (i.e. the return to the lenders or the YTM).

    Using the beta always gives the return to the investors (as I do explain in my free lectures). When later in the answer the WACC is calculated then it has been multiplied by 0.8 so as to give the post-tax cost to the company.

    January 24, 2024 at 9:50 am #698981
    konain03
    Participant
    • Topics: 4
    • Replies: 2
    • ☆

    Ohhh, thank you so much for clarifying my doubt instantly!

    January 24, 2024 at 4:14 pm #699016
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54720
    • ☆☆☆☆☆

    You are welcome 🙂

  • Author
    Posts
Viewing 4 posts - 1 through 4 (of 4 total)
  • The topic ‘Coeden Co’ is closed to new replies.

Primary Sidebar

Donate
If you have benefited from our materials, please donate

ACCA News:

ACCA My Exam Performance for non-variant

Applied Skills exams is available NOW

ACCA Options:  “Read the Mind of the Marker” articles

Subscribe to ACCA’s Student Accountant Direct

ACCA CBE 2025 Exams

How was your exam, and what was the exam result?

BT CBE exam was.. | MA CBE exam was..
FA CBE exam was.. | LW CBE exam was..

Donate

If you have benefited from OpenTuition please donate.

PQ Magazine

Latest Comments

  • finance123 on Investment Appraisal – NPV, IRR – ACCA Management Accounting (MA)
  • Rashi@gupta on FA Chapter 4 Questions Accruals and Prepayments
  • natashad25 on Investment Appraisal – NPV, IRR – ACCA Management Accounting (MA)
  • finance123 on Investment Appraisal – NPV, IRR – ACCA Management Accounting (MA)
  • finance123 on Investment Appraisal – NPV, IRR – ACCA Management Accounting (MA)

Copyright © 2025 · Support · Contact · Advertising · OpenLicense · About · Sitemap · Comments · Log in