Kenny Whitelaw-Jones

Let's define some terms that we will use throughout this section. This section only talks about "corporate income tax" - a tax on company profits. For simplicity, I will refer to it just as "tax". Tax paid Tax paid is the tax amount going

Every reader of this book will face different tax problems, in different tax jurisdictions, with different tax rules.

Uncovering problems like this are why we build models.

Using debt service coverage ratio to determine debt capacity.

All lenders seek to understand and quantify the ability of the borrower to repay their debt.

It looks like this section gets the prize for the longest chapter title.

We have now seen that both the amount of debt and the cost of debt will impact the equity IRR. The repayment profile of the debt will also have an impact.

All debt interest is calculated as a rate multiplied by a balance. Always. The complexity is "what is the correct rate" and "what is the correct balance".

Corporate finance 101.

Modelling the straight-line principal repayment of debt is like modelling straight-line depreciation.