Kd(1-t): Difference between revisions
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Kd(1-t) has two closely related meanings. | |||
#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. | |||
#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 == | == See also == | ||
* [[Cost of debt]] | * [[Cost of debt]] | ||
* [[Tax relief]] | |||
* [[Weighted average cost of capital]] | * [[Weighted average cost of capital]] | ||
Revision as of 18:55, 15 January 2016
Kd(1-t) has two closely related meanings.
- 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.
- 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.
