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Deaar Sir, in section B Mar/jun19 Tulip Co, question 2 , can I understand that cost of debt is return required by investor, so i can ignore tax?If so, I don’t understand question 191 in BPP Kit, when calculating cost of debt, why it should take into account of tax?Thank you.
The cost of debt is always after tax. The return to the investor is before tax.
Tulip wants the cost of debt, not the return to the investor, but since there is no rate of tax mentioned in the question we have no choice but to ignore tax.
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