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Hello! I would need your help. Sometimes in the calculation of the market value of loan note I see that the examiner is taking into consideration interest after tax and sometimes before tax. I cannot find the rule for that. Tax is usually given in the question. But is that different when we have the convertible loans? What should be approach for that?
thanks
KasiaYou will never see the examiner taking interest after tax when calculating the market value of debt!!!
It is the investors who determine the market value and they are not affected by company tax, and it is the same whether the loans or convertible or not.
I do stress this in my free lectures, because it is so often asked.
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