Define Cost of debt. Cost of debt synonyms, Cost of debt pronunciation, Cost of debt translation, English dictionary definition of Cost of debt. n. 1. Something owed, such as money, goods, or services: used the proceeds to pay off her debts; a debt of gr
Debt is one part of a firm’s capital structure. A firm uses various bonds, loans and other forms of debt, so cost of debt is the rate paid by the firm to use this debt as a means of finance. Multiplying the before-tax rate (by one, minus the marginal tax rate) gives the after...
What is the definition of cost of debt?The debt cost is an important financial concept for valuations, merger activity, acquisitions activity, and any event that requires the raising of debt. It is a cost that is used by a vast array of financial professionals to determine the optimal capital...
Cost of debt is a formula used to ensure that business purchases are profitable. Any interest you pay on debt is tax-deductible. You can calculate the cost of debt with or without factoring in tax savings. Ideally, the cost of debt is lower than the profit you make on any debt-funded...
Meaning and definition of Cost of Debt Cost of debt generally refers to the effective paid by a company on its debts. The cost of debt can be calculated in either before or after tax returns. However, the interest...
Guide to the Cost of Debt & its definition. Here we discuss the formula to calculate the cost of debt for WACC along with practical examples.
Cost of debt (kd) is the effective interest rate that a company pays on its debt. It equals the debt's yield to maturity, the return which the bondholders require given the company's credit risk.
On this page Definition Chapters and Articles Related Terms Recommended Publications Chapters and Articles You might find these chapters and articles relevant to this topic. Valuation of Pfizer Rajesh Kumar, in Valuation, 2016 21.4.1 Cost of debt The cost of debt is assumed as the yield to matur...
After-tax cost of debt is the net cost of debt determined by adjusting the gross cost of debt for its tax benefits. It equals pre-tax cost of debt multiplied by (1 – tax rate). It is the cost of debt that's included in calculation of WACC.
Agency cost of debt is a problem arising from the conflict of interest created between shareholders and debtholders.