Meaning, what is the tax benefit, what's the actual tax

benefit of the debt interest that your income generating.

And that, because you're doing that, if you look at the way the calculation works,

you're taking some percentage.

Something less than 1, right?

And so you're multiplying that times the debt of percentage.

And that results in an overall lower Weighted Average Cost of

Capital because the opportunity cost of capital, sorry,

the Weighted Average Cost of Capital is lower than r,

the opportunity cost of capital, because the cost debt is after-tax.

Reflecting with tax advantages of debt in the Weighted Average Cost of Capital.

I hope that makes sense.

I need to say that again.

The old method let's say, the old method of calculating the r,

that's Modigliani method that you'll be more interest.

That number is going to be higher than the weighted average cost of

capital because of the impact of interest lowers that cost down.

So that's important to understand, okay.

So the weighted average cost of capital reflects

the after-tax benefit of debt In the capital structure and

the variables are considered for the firm as a whole, okay?

So you're looking at your calculating this as the firm as a whole.

So in a perfect world, only projects that are exactly like the firm.

In every way there's just calculation worked best.

But in reality, nothing is perfect so

it works with the kind of the average project.

So people have decided that we're going to need [INAUDIBLE] source of capital.

Now, if for example you were going to have a project that it is much lesser risky or

much more risky than the average of projects that the firm had done.

Because the average risk of the firm will reflect that

debt versus equity out the way.

So it would be incorrect to use weighted average cost capital if you had a project

that was so different than the firm itself.