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Question 2. While computing the cost of equity using the formula , rs=D1P0+g, we do not make any adjustment to express the cost of equity

Question 2.

While computing the cost of equity using the formula , rs=D1P0+g, we do not make any adjustment to express the cost of equity on an after-tax basis whereas while computing the cost of debt, a tax adjustment is required to arrive at after-tax cost of debt. Why is this so? Explain briefly. (75-150 words)

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