Debentures ,Bonds,Fixed deposits,Term loans ets..Debt may be issues and redeemed at par premium or discount.
1.Debt issued at par and redeemed at par/Cost of perpetual debt(irreedeemable debt.)
The before tax cost of debt(BTCD) is simply the interest offerd to the suppliers of money.
BTCD= Interest/Net proceeds.
Eg. A company issues 3years debentures of Rs 100 at 15% coupon rate .Calculate BTCD.
BTCD=15/100=15%
2.Debt issued and redeemped at discount or at a premium & Cost of existing debt.
for details visit-http://www.mbachannel.blogspot.in/2014/05/cost-of-debt.html
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