Ennea Co

This topic has 2 replies, 2 voices, and was last updated 9 years ago by John Moffat.

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May 28, 2017 at 4:59 pm #388624
Anonymous
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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?
May 28, 2017 at 5:01 pm #388625
Anonymous
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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)?
May 28, 2017 at 6:27 pm #388642
John Moffat
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Correct 🙂 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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