Tax element in Cost of Equity practice, different, element, adjusted

hw0799

I often see two different formulas for CoE in practice:

CoE = Rf + MP * beta

where either MP is defined as:

1) MP = Rm - Rf

or

2) MP = Rm - Rf * (1-t)


Questions:

- What is the rationale for tax adjusting Rf in formula 2?

- Should Rf be tax adjusted when calulating MP?

- Does anyone know of an article discussing the issue?