Dear Sir,
In calculating the interest for the various propositions, why did we take coupon and not use IRR to find the effective interest of the loan?
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Ennea Co
I just realised it's a loan, not a bond!
If it was a bond, we would find the effective rate of the bond using it's after tax cash flows and then it's MVd using the effective rate (IRR)?
9y ago#2Correct :-) For a bond you need to calculate the IRR. For a loan, the cost is simply the interest rate on the loan (after tax).
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