After-tax cost of debt is the net cost of debt determined by adjusting the gross cost of debt for its tax benefits. It equals pre-tax cost of debt multiplied by (1 – tax rate). It is the cost of debt that's included in calculation of WACC.
Definition of After-Tax Cost of Debt The after-tax cost of debt is the interest paid on the debt minus the income tax savings as the result of deducting the interest expense on the company’s income tax return. Example of After-Tax Cost of Debt Let’s assume that a regular U.S. ...
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Net Operating Profit After Tax (NOPAT) measures a business’s theoretical income if debt was not a factor. Learn how to calculate and utilize this data.
Net Operating Profit after Tax (NOPAT) is a profitability measurement that calculates the theoretical amount of cash that a company could distribute to its shareholders if it had no debt.
differently leveraged. If the company has raised funds by way of debt, then its cost (that is, interest expense) is not included in the calculation of net operating profit after tax. Basically,net operating profit after taxis the net income of a company considering it as an unleveraged one...
Typical problem progression calculate the after tax cost of debt for the below. Use tax rate of 30%. A) Loan at a stated rate of 6% B) Bo The nation of Fishkasar has a tax rate of 10% on the first 20,000 walops (the national currency) of taxable income, then 25% on the nex...
(1 - 0.3)). This is an approximation ofafter-tax cash flowswithout the tax advantage of debt. Note that if a company does not have debt, net operating profit after tax is the same as net income after tax. When calculating net operating profit after tax, analysts like to compare against...
After-Tax ROA = (NOPAT ÷ ATA) x 100 = [EBIT x (1-Tax Rate)] ÷ ATA x 100. Net Income After Taxes (NIAT) Net income after taxes(NIAT) is the sum of all revenues minus all expenses, including the cost of goods sold, depreciation, interest, and taxes. NIAT is found on theincom...