PerAccounting Coach, the after-tax interest rate formula is: After-Tax Interest Rate = (1 – Company’s Effective Tax Rate) x Bond Interest Rate So, you can use that to get the after-tax interest expense in dollars by expanding the formula as follows: After-Tax Interest Expens...
PerAccounting Coach, the after-tax interest rate formula is: After-Tax Interest Rate = (1 – Company’s Effective Tax Rate) x Bond Interest Rate So, you can use that to get the after-tax interest expense in dollars by expanding the formula as follows: After-Tax Interest Expens...
Using the example above, the after-tax interest rate can also be calculated. The formula for the after-tax rate is: the loan interest rate of 10% minus (30% tax savings on the 10% interest rate) = 10% minus 3% = 7%. Related Questions How do I calculate the amount of sales tax th...
Due to this tax benefit of interest, effective cost of debt is lower than the gross cost of debt. FormulaAfter-tax cost of debt can be determined using the following formula:After-Tax Cost of Debt = Pre-Tax Cost of Debt × (1 – Tax Rate)...
Design/methodology/approach – This formula is derived by adjusting the APR provided by the lender for the length of the mortgage, the amount of discount points, the mortgage interest rate, and the borrower's tax rate. Findings – From this formula, it is found that the tax-adjusted APR ...
This formula is very sensitive to changes in nominal interest rate levels and in particular, during inflationary periods it acts so as to dramatically increase the tax burden of life insurancesavings.Life insurance savings is therefore an example of the non-neutrality of monetary policy. This is ...
After Tax Cash Flow Formula The formula to calculate the after tax cash flow is as follows. After-Tax Cash Flow = Net Operating Income (NOI) – Annual Debt Service – Income Taxes Where: Net Operating Income (NOI) = (Rental Income + Ancillary Income) – Direct Operating Expenses Annual De...
State and explain the formula of Internal Rate of return (IRR). Are 'return on investment' (ROI) and 'internal rate of return' (IRR) the same thing? Internal Rate of Return (IRR) is: a. That point in time when costs are finally more than offset by revenues b. A key measure of ...
while those in neighboring West Virginia, pay a top marginal rate of 6.50%, according to the Tax Foundation. In addition to income taxes, companies may be subject to other state taxes, which can also vary from one state to another.2 ...
To calculate NOPAT, the operating income, also known as the operating profit, must be determined. It includes gross profits less operating expenses, which is comprised of selling, general, and administrative (e.g., office supplies) expenses.2The NOPAT formula is NOPAT=Operating Income×(1−Ta...