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Hi
My question is in valuing debt either irredeemable or redeemable/convertible, do we need to consider tax if its given in the question and calculate after tax interest or we do not consider tax at all even if its given?Thanks
When calculating the MV of debt, tax is not relevant. It is investors who determine the MV and they are not affected by company tax. Tax is only relevant when calculating the cost of debt to the company.
I do stress this in my free lectures on the valuation of securities.
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