31 July 2015
NOPAT is profits derived from a company's operations after cash taxes but before financing costs and non cash book keeping entries..
Sir why should we deduct interest( net of taxes) from PAT to get NOPAT.. I understood y we must deduct interest, Y we should deduct interest NET OF TAXES?? And not interest directly??
31 July 2015
If you pay 10% interest on borrowing which will be allowed as expenditure for the purpose of tax working. Considering 30% tax saving the effective cost of borrowing is only 7%. If you see cost of capital working for projects you will understand.