Kd(1-t): Difference between revisions
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Kd(1-t) has two closely related meanings. | Kd(1-t) has two closely related meanings. | ||
1. | |||
The after-tax relief cost of debt - usually known more simply as the 'after-tax cost of debt' - used in calculating a firm's weighted average cost of capital. | |||
2. | |||
A simple and common estimation method for the after-tax cost of debt. To make the estimate, the pre-tax cost of debt (Kd) is multiplied by (1 - t), where (t) is the relevant rate of corporate tax relief on debt servicing costs. | |||
Revision as of 12:00, 13 May 2016
Kd(1-t) has two closely related meanings.
1.
The after-tax relief cost of debt - usually known more simply as the 'after-tax cost of debt' - used in calculating a firm's weighted average cost of capital.
2.
A simple and common estimation method for the after-tax cost of debt. To make the estimate, the pre-tax cost of debt (Kd) is multiplied by (1 - t), where (t) is the relevant rate of corporate tax relief on debt servicing costs.
