The cost of debt capital is lower after taxes than before taxes The cost of equity capital is more difficult to estimate using the dividend method or the CAPM model, for example, yet the after tax and before tax cost of equity capital is the same Why are the after tax rates not the same for both ty...

The cost of debt capital is lower after taxes than before taxes. The cost of equity capital

Question:

The capital is lower after taxes than before taxes. The capital is more difficult to estimate using the method or the CAPM model, for example, yet the after-tax and before-tax capital is the same. Why are the after-tax rates not the same for both types of financing?

Cost Of Debt
The cost of debt is the effective interest rate a company pays on its debts. It’s the cost of debt, such as bonds and loans, among others. The cost of debt often refers to before-tax cost of debt, which is the company's cost of debt before taking... Cost Of Equity
The cost of equity is the return a company requires to decide if an investment meets capital return requirements. Firms often use it as a capital budgeting threshold for the required rate of return. A firm's cost of equity represents the... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...