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I practicing some eva questions from kit and pass papers. The examiner sometimes uses the PAT figure and sometimes PBIT tax figure to calculate NOPAT. And in some question he only uses Profit before interest.
Which figure should I use in the exam ? I cant understand which one to use
Thank you
You can use either PBIT or PAT the main difference will be how the interest payments and tax are dealt with.
The key point to remember that the cost of capital/WACC is used as a finance charge and not the debt( interest) hence the reason why the interest payments are stripped out
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