FCF Mergers and Acquisitions

CFA Level II Corporate Finance
#1

In calculating FCF in M&A, We started with NI and then we add Net interest after tax which is (interest expense - interest income) (1 - marginal tax rate).

Why didn’t they just say interest expense (1 - marginal tax rate) ? Cause I see that this is what they are actually doing in the calculations. Thanks.

#2

I may be wrong but it could be to cover the fact that a firm may actually have an income from interest, IE accrective to earnings and they need to account for that fact.

#3

Thanks Jeff