SWATI KAUSHIK (chartered Accountant) (269 Points)
10 April 2014
PAT (Profit after Tax) arrives after deducting Tax from PBT, which should be discounted by Ko (Cost of Capital). Because Ko is arrive by weighted average of Ke & Kd (i.e. We *Ke + Wd * Kd)
Where Kd = Debt Interest rate (1-tax) i.e. interest rate net of tax
Ke = cost of equity
We = weight of equity
Wd = weight of debt
CMA.Manikanta
(Grad-CMA &CA-Final)
(314 Points)
Replied 10 April 2014
CAclubindia
