We noted that, when calculating EVA, you should calculate income as the sum of the aftertax interest

Question:

We noted that, when calculating EVA, you should calculate income as the sum of the aftertax interest payment and net income. Why do you need to deduct the tax shield? Would an alternative be to use a different measure of the cost of capital? Or would you get the same result if you simply deducted the cost of equity from net income (as is often done)?

AppendixLO1

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question
Question Posted: