shouldnt the 6% be tax deductable? 6 x 0.7 = 4.2 ?
https://www.youtube.com/watch?v=-BfAxHDUhck
Ask the Tutor ACCA FM
reedemable debt - example 8 - cost of debt
4y ago#1Tax is not relevant when calculating the return to investors (in part (a) of the question) because investors are not affected by company tax.
It is relevant when calculating the cost of debt to the company (because the interest does save tax).
I explain this in the lectures working through both parts of the question (and the answer is of course printed in the free lectures notes as well).
Sign into reply to this topic.