How do you determine the appropriate cost of debt for a comp
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Cost of Debt Estimation
How do you determine the appropriate cost of debt for a company? Does it make a difference if the company's debt is privately placed as opposed to being publicly traded? How would you estimate the cost of debt for a firm whose only debt issues are privately held by institutional investors?
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This solution discusses how to determine the appropriate cost of debt for a company.
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How do you determine the appropriate cost of debt for a company?
- The appropriate cost of debt is determined by calculating the interest rate the company would have to pay, if the debt were issued again today. This is calculated as an after-tax cost of debt to the company.
Does it make a difference if the company's ...
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