Estimating the Cost of Capital with Debt Financing in a Foreign Currency (Uoc Luong Chi Phi Von Dau Tu Co No Vay Ngoai Te) (Vietnamese Version)

Financial Project Appraisals Working Paper No. 004-2003

19 Pages Posted: 23 Jul 2003

See all articles by Tran Viet Thang

Tran Viet Thang

SAIGON COMMERCIAL BANK (SCB); affiliation not provided to SSRN

Joseph Tham

Educational Independent Consultant

Date Written: July 10, 2003

Abstract

Many firms have debt financing in a foreign currency. What are the tax implications of the foreign loan for the calculation of the Weighted Average Cost of Capital (WACC)? With a foreign loan, there are two effects. First, there is the standard tax savings from the interests deduction with the foreign loan. Second, we assume that changes in the value of the loan in the foreign currency can be listed in the income statement ofr tax purposes. In this teaching note, we examine how the WACC must be properly used to take into account both of the effects: The interest deduction and the change in the value of the foreign debt.

Note: The downloadable document is in Vietnamese. The English version is available at http://ssrn.com/abstract=411740

JEL Classification: D61, G31, H43

Suggested Citation

Thang, Tran Viet and Thang, Tran Viet and Tham, Joseph, Estimating the Cost of Capital with Debt Financing in a Foreign Currency (Uoc Luong Chi Phi Von Dau Tu Co No Vay Ngoai Te) (Vietnamese Version) (July 10, 2003). Financial Project Appraisals Working Paper No. 004-2003, Available at SSRN: https://ssrn.com/abstract=423060 or http://dx.doi.org/10.2139/ssrn.423060

Tran Viet Thang

SAIGON COMMERCIAL BANK (SCB) ( email )

4- HO XUAN HUONG
Hanoi, 10000
Vietnam
084-04-9438732 (Phone)
084-04-9438734 (Fax)

affiliation not provided to SSRN

Joseph Tham (Contact Author)

Educational Independent Consultant ( email )

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