Corporate Finance

sanbiz20
Finance Junkie
Posts: 64
Joined: Sat Apr 01, 2017 2:12 pm

Corporate Finance

Postby sanbiz20 » Thu Feb 01, 2018 7:51 am

Could you explain the formula for cost of equity considering that the effect of taxes.

I tried to derive it myself using the basic WACC equation but my formula is different from the one mentioned in the textbook.
Due to technical reasons i am unable to upload the image of my derivation here. hence request you to kindly provide me the derivation of the formula.

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edupristine
Finance Junkie
Posts: 937
Joined: Wed Apr 09, 2014 6:28 am

Re: Corporate Finance

Postby edupristine » Thu Feb 08, 2018 5:40 am

Please find the enclosed file.
Attachments
screenshots272.jpg
screenshots272.jpg (42.56 KiB) Viewed 31 times

sanbiz20
Finance Junkie
Posts: 64
Joined: Sat Apr 01, 2017 2:12 pm

Re: Corporate Finance

Postby sanbiz20 » Thu Feb 15, 2018 6:10 am

Kindly note that the derivation that you have provided does not take into account the effect of taxes on the cost of debt. I have derived the same but the end result that i am getting is different from the formula mentioned in the book. Could you look into my attachment and guide me where I am going wrong.
Attachments
Cost of equity doubt.jpg
Cost of equity doubt.jpg (3.09 MiB) Viewed 14 times


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