When calculating mv of loan notes, when should we consider and include corporate tax in debt required rate of return (post tax) and when pre tax one?
Thank you
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Market Value of Loan Notes
5y ago#1No!!
It is investors who determine the market value of debt and they are not affected by company tax.
Tax is only relevant when calculating the cost to the company.
Do watch my free lectures because I stress this in my lectures (and it is something that is often relevant in the exam).
The lectures are a complete free course for Paper FM and cover everything needed to be able to pass the exam well.
Thank you.
5y ago#3You are welcome :-)
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