Robson (March/June 2021) — OpenTuition Forums

LLily2y ago

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 :)

John MoffatTutor2y ago#1

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

LLily2y ago#2

Thanks for clarifying!

John MoffatTutor2y ago#3

You are welcome :-)

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