标题: Tax element in Cost of Equity [打印本页] 作者: ba736 时间: 2013-4-13 23:35 标题: Tax element in Cost of Equity
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?作者: ninja1024 时间: 2013-4-13 23:35
Could this have been relating to a certain type of investor? Say, a tax exempt one?
