WACC-MV of debt

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February 10, 2021 at 4:19 am #609875
Noah098
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sir in a WACC where we would need the MV of debt. If both coupon% and pre-tax Kd given then we directly discount teh coupons and redemption amount with pre-tax Kd.

But if coupon% and post-tax Kd given then to find the MV of debt, we would first have to multiply coupon x (1-T), and then discount by post-tax KD, right sir?
February 10, 2021 at 10:45 am #609906
John Moffat
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It is investors who determine the market value and they are not affected by company tax.
Therefore if calculating the market value we discount the pre-tax flows to the investor at the pre-tax cost of debt.
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