Why cost of debt calculated as after-tax cost


Question 1: In the weighted cost-of-capital, why is the cost of debt always calculated as an after-tax cost, or debt percent * (1-tax rate)?

Question 2: Briefly explain how the discount rate, or the cost-of-capital, be used to represent the risk associated with a particular investment opportunity?

Solution Preview :

Prepared by a verified Expert
Finance Basics: Why cost of debt calculated as after-tax cost
Reference No:- TGS02043356

Now Priced at $20 (50% Discount)

Recommended (94%)

Rated (4.6/5)