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Dear tutor, when we find the market price of bond, do we always ignore tax on interest pay and cost of debt?when we calculate WACC we use after tax cost of debt?
Also, bank loan on the balance shows 8%, is it coupon rate or cost of bank loan?if bank loan cost of debt is not given, do we always consider the cost of bond in calculating Bank loan WACC?
thanks in advance
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december 2011 q 3
5y ago#1First sentence: Yes to both
Second sentence: The SOFP shows a 6% bank loan. Therefore the cost of the bank loan is 6% less that ast 30%.
understood.
5y ago#3You are welcome :-)
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