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Slide Financial Management - Chapter 20

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evaluated on an after-tax basis, we should use the after-tax cost of borrowing.. Previously, we were told the cost of debt, k d , was 10%. Cost of Owning Analysis. Cost of asset (1,200.0). PV cost of owning. Notes on Cost of Owning Analysis. Each maintenance payment of $25 is deductible so the after-tax cost of the lease is (1...

Slide Financial Management - Chapter 21

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Cash flow . What is the appropriate discount rate to apply to the target’s cash flows?. Discounting the target’s cash flows. The cash flows reflect the target’s business risk, not the acquiring. However, the merger will affect the target’s leverage and tax rate, hence its financial risk.. The target firm has 10 million shares. The acquirer estimates the maximum price...