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hello, when do we take pre tax cost of capital (dont substract tax from coc) and post tax (substract tax from coc) cost of capital in calculations of npv or WACC ?
We always use the after tax cost of debt when calculating the cost of capital.
Tax is only ignored when calculating the return to investors, because investors are not affected by company tax. Always discount projects at the after-tax cost of capital.May I suggest that you watch the free lectures on this. The lectures are a complete free course for Paper FM and cover everything needed to be able to pass the exam well.
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