Investing for Beginners .EU, investing You get recessions, you have stock market declines. If you don't understand that's going to happen, then you're not ready, you won't do well in the markets.
Peter Lynch

Investment Dictionary

Browse by search:

Browse by Letter: A B C D E F G H I J K L M N O P Q R S T U V W X Y Z All

Cost of Debt Formula


Cost of debt formula 


Theoretical cost of debt formula:


Before tax cost of debt = Risk free rate + Credit risk premium 

After tax cost of debt = (Risk free rate + Credit risk premium) * (1- Corporate tax rate)

You should not use these theoretical formulas if you have other ways to determine cost rate, as there are practical difficulties to calculate credit risk premium easily and correctly because risk premium depends on market conditions that are changing all the time. 


If you want to calculate the cost of debt for practical purpose, you should read cost of debt calculation.



Last searches: growth , bull , platform , coverage ratio , grain , interest exp , ROE , investment consultant , return yield , pig , investing , investment , beginners , stocks