Cost of debt in statement of CF

This topic has 3 replies, 2 voices, and was last updated Apr-17 by vincentt.

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- vincentt
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  10 Apr 2017 at 9:45 am
  
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  Is the cost of debt stated under the Statement of Cash Flows after taxed figure?
- Reena
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  10 Apr 2017 at 12:09 pm
  
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  I don’t think so @vincentt. In cash flow statement, the outgoing interest (cost of debt) you pay is the full cash amount, which reduces the taxable profit, and reflected as less taxes in Income Statement.
- vincentt
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  10 Apr 2017 at 3:51 pm
  
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  hmmm… that’s bad… i convert it to a after tax figure to get WACC (to calculate the value to firm) but the solution just add the actual figure.
- vincentt
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  10 Apr 2017 at 3:59 pm
  
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  okay all good now… found the reason why.
  
  http://www.schweser.com/news/news_updates.php?new_level=cfa2&type=schweser#practice_exams_vol_1
  
  Practise Exams, Vol. 1,
  Page 17: The cost of debt of 4.50% given in the last exhibit should be listed as after-tax.
  Posted: 2013-03-18
  
  :-w
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