Calculator · Cost of capital
Cost of debt calculator
Estimate a pre-tax and after-tax cost of debt from an observed bond yield or borrowing rate, a synthetic rating based on interest coverage, or an actual rating, in US dollars and local currency.
How the cost of debt is estimated
Where the company has traded bonds or recent borrowing, the observed yield is usually the best evidence. Otherwise the calculator maps the interest coverage ratio to a synthetic rating with Damodaran's tables for large or small firms, or takes an actual rating, and adds the matching default spread to the risk-free rate; the country default spread is added where the business is exposed to country risk.
The after-tax cost of debt uses the marginal tax rate from the OECD statutory rates or your own figure, and the result can be converted to local currency. Warnings flag a cost of debt at or above the cost of equity and ratings below the sovereign.
Related: WACC calculator · Distress probability calculator · OECD data guide · Model notes
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