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how to calculate weighted average cost of debt. To calculate after-tax cost of debt youll simply take the cost of debt and multiply it by 1 tax rate. How to calculate weighted average cost of capital The standard WACC formula may look a little complicated but once youve got all the information you need learning how to calculate WACC isnt too much of a challenge.
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To calculate after-tax cost of debt youll simply take the cost of debt and multiply it by 1 tax rate. CAPM 506 037 x 10 506 689. Mathematically the required return of each source of funding is multiplied by its respective weight in the companys capital structure.
Here credit spread depends on the credit rating.
WACC E V x Re D V x Rd x 1 - T Lets look at an example. Cost of Debt is calculated Using below formula Cost of Debt Interest Expense 1- Tax Rate Cost of Debt 16000 1-30 Cost of Debt 16000 07. Re total cost of equity. To calculate WACC companies can use the following formula.
