After-Tax Kd in WACC
Short definition
After-tax cost of debt is all-in Kd after the shield. It is WACC’s debt leg; if T cannot be used the multiplier tends toward 1.
Detailed explanation
Kd is marginal all-in (spread, fees, reserves), not the historic coupon. T is not the statutory rate but actual tax-paying capacity. Losses and carry-forward limits cut the shield.
An FX loan’s after-tax local equivalent is not written without FX and hedge. EIR is not Kd; EIR is accounting, Kd is a WACC input.
Why it matters for the CFO
In a high-rate period the claim that “after tax it is still cheap” holds only if there is profit. Otherwise debt stays as dear as equity, or dearer.
How it is calculated
Kd_vergi_sonrası = Kd × (1 − T)
Variables in the formula
- Kd: Pre-tax all-in cost of debt
- T: Usable marginal tax rate
How to read it
Kd 40%, T 25% and a full shield → 30%. If T=0, 40%. There is no universal “after-tax cheapness”; profit and policy set it.
Numerical example
All-in Kd 36%, usable T 25% → after-tax Kd = 36% × 0.75 = 27%.
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Definitions are educational. They are not investment, credit or tax advice.