Cost of debt

AFM

Sir, Here the company's cost of debt (pre tax) is 6%, right. Then ideally we should have taken this as the discount rate know sir. Why have we taken 8% (arrived from post tax cost of debt - 5.6%)? [Video Time Stamp: 17:16] Video Details ------------- Advanced Financial Management - AFM International Financial Management #25. Illustration # 11

Swathi S

CA Final

★ 975

02-Apr-26 13:27

Answers (1)

The debt rate of 6% is a special subsidized rate . That should not be considered. what should be considered is normal debt rate

Sriram Somayajula

Admin

03-Apr-26 08:33