2016 Fall #18
How is the pre-tax cost of capital used in the problem? The randomly generated Excel problems suggest we need it and would for the exam problem as well, but it doesn't look like it's used.
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How is the pre-tax cost of capital used in the problem? The randomly generated Excel problems suggest we need it and would for the exam problem as well, but it doesn't look like it's used.
Comments
They calculate cost of capital but what for?
Fair-value liability is made up of PV of payments and cost of capital, as you see in this solution.