Abstract The optical properties of cadmium telluride including the linear optical dielectric function, the refractive index, the extinction coefficient, the reflectivity and the plasmon energy have been calculated by density functional theory (DFT). The full potential linearized augmented plane wave (FL-LAPW) method was used with the generalized gradient approximation (GGA) including the orbital dependence of the self-energy, i.e. the orbital-dependent potentials of Coulomb and exchange interactions (GGA+U). Using only LDA or GGA methods underestimates the electronic parameters (band gap and band dispersion). Applying orbital-dependent potentials splits the Te-5s state and shifts the binding energies of the Cd-4d levels towards the experimentally determined position. The calculated results indicated that although Te-5s and Cd-4d overlap, Cd-4d plays an important role in absorption and reflectivity constants. The optical constants of CdTe in hexagonal structure exhibit anisotropy (birefringence) in two directions (in basal-plan and c-axis) but the difference is very small in the static limit.

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