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If we have to calculate market value of a convertible bond.. Which interest cashflow we will include in the calculation.. Interest after-tax or before-tax?
Before tax.
Tax is irrelevant when calculating the market value of debt (whether the debt is convertible or not). It is the investors who determine the market value of debt, and they are not affected by company tax.
I do stress this in my free lectures on the valuation of debt.
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