Kd(1-t)

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.

See also

• Accruals basis
• Cost of debt
• Tax relief
• Weighted average cost of capital