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Hi John,
1. I was wondering why we do not deduct the tax from the free cash flows when calculating the base case NPV?
2. Issue costs of 2% are payable on gross external financing. This means that we have to gross up right (2/98)?
Many thanks 🙂
1. We take the free cash flows after tax and so the free cash flows given in the question must already be after tax.
2. Correct
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