How do I calculate the cost of debt?
I'm already on WACC Are well aware of the formula: WACC = (k_e * (E / E + D, a)) + (k_d * (D Group / Group E + D) * (1 – T is for )}…. k_e or stocks, or where The estimated cost of equity or debt to income ratio is required k_d Estimated rates before the tax return is required. And, In addition, an e-market value of the stock market vlaue Group D is debt, T corporate Is the rate. Now, my question is: What debt k_d (value for money)? It Fixed value (), 5% or some such formula, or on the internet which tell k_d Some data table, how much is it? In addition, over the same comapnies Or companies within the industry is k_d What is the difference between? My books because I site on the internet (and more) k_d of concrete defintion exaplin Answers, but looking for ways to get the value of your talk Do not. Thank you!
Mean you were, what the cost of debt? Ryulyi The company paid for the current debt effectively. This is also the previously Can be measured – or – tax returns, but because interest expense is deductible What, after-tax cost of most Vaughan. This Also includes the cost of capital is a part of the company's capital structure. 10% of that debt and interest costs, taxes and the tax rate is 35 percent thought that Deductions. Debt balance is $ 1000. And the cost is 10% of 1000 = $ 100. You will be paid to the bondholder. However, because Will be deducted from your income, your taxes on it I got 35%. Tax savings is 35% * 100 = $ 35. Therefore, tax Reduce your interest in the net only costs $ 100 – $ 35 = $ 65. We have a relationship Can be generalized to the algebraic form as follows: After Taxes before the tax cost of debt = cost of debt * (1 – tax Rate) after tax cost of the case debt = 10% * (1-.35) = 6.5% hope your Answer questions
Ron Paul on CNN American Morning – 5/27/09 – Dprogram.net