0
The estimated yield on new bond issues of the same risk times one minus the shareholder marginal tax rate.
Wiki User
∙ 12y ago
Add your answer:
Earn +20 pts
How does the cost of debt differ from the cost of capital?
Cost of debt considers only the cost that goes to the debtholders. Cost of capital considers debt and equity costs both.
Why is the coupon rate a bad estimate of a firm's cost of debt?
A coupon rate is not a good estimate of a firm's cost of debt, as it is only a reflection of the firm's cost of debt when bonds were issued, not the current cost of debt. It's not representative of the yield in the current market.
What can happen to your debt after your car is repossessed?
Your debt is then written off as the car covers the cost of the debt.
Is cost of equity capital less than cost of debt capital?
Cost of equity > Cost of debt Reason: When u issue debt, for example in the form of bonds, u have to pay bondholders interest. This interest is tax deductible. On the other hand, when u issue equity, i.e. stocks, u pay dividends. This dividend is taxed as corporate income. Because of the ability of debt to escape taxation vis-a-vis equity, cost of debt is lower than cost of equity. In fact, this is called a debt tax shield.
Is the relevant cost of debt the interest rate on already outside debt or that on new debt?
Yes according to mcdonalds
Difference between cost of debt and marginal cost of debt?
Cost of debt is the original cost of borrowing including original interest rate Marginal cost of debt is new loan which extended from the previous one, the interest of which is called marginal cost of debt.
How does the cost of debt differ from the cost of capital?
Cost of debt considers only the cost that goes to the debtholders. Cost of capital considers debt and equity costs both.
Why is the coupon rate a bad estimate of a firm's cost of debt?
A coupon rate is not a good estimate of a firm's cost of debt, as it is only a reflection of the firm's cost of debt when bonds were issued, not the current cost of debt. It's not representative of the yield in the current market.
If a company's debt is low does marginal cost of capital apply?
Weighted average cost of capital includes cost of debt and cost of equity. Thus irrespective of existing proportion of debt and equity, the marginal cost is always applicable.
What is after cost of debt?
The after-tax cost of debt is predominantly based on marginal pretax costs, as well as marginal or statutory tax rates.
If you have the debt assets after taxes percent of 10 percent cost of debt 8 percent and cost of equity 12 percent how is cost of capital calcuated?
WACC = Cost of Debt * Weight of Debt = + Cost of equity * Weight of Equity WAAC = .08*.10 + .12*.90 WAAC = 10.88%
The after-tax cost of debt will almost always be below?
The after-tax cost of debt will almost always be below
What were Georgia founders determined to do?
create a haven for people imprisoned for debt.
What can happen to your debt after your car is repossessed?
Your debt is then written off as the car covers the cost of the debt.
How do you calculate cost of dedt?
Calculate cost of debt for what??????
How is a maginal cost determined?
The marginal cost of demand can be determined by two ways: 1) Taking the derivative of a cost function. This function express the rate of change of the cost function per unit produced. 2) Manually finding the change in production cost as production changes from one unit to the next. For example, if Walmart can produce tables for ten cents cheaper per unit produced, then its marginal cost is -$0.1.
Is bad debt expenses considered a product cost?
Bad debt expense is a product cost, depends directly on sales.
