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Cost Of Debt

An explanation of how companies calculate and manage the cost of debt in financial planning.

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  1. Page 1

    Cost Of Debt, page 1Cost of DebtCost of debt = Interest Payments

  2. Page 2

    Cost Of Debt, page 2DefinitionDebts are the borrowing which company takes tofinance the company therefore they have to payinterest on those borrowing. So the cost of debt isthat interest which company has to pay on theborrowings and normally it is taken after tax as it isthe tax deductible expense.

  3. Page 3

    Cost Of Debt, page 3Cost of DebtPVIF6Interest ratex in PVIF formula1-1/1+x^10)/xThe x in PVIFformula is6.01477310.50%

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