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Cost of Debt Determine the market value of the firm's debt issues. Be sure to review the firm's 10-K. Also, the website...
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a.Cost of Debt
Determine the market value of the firm's debt issues. Be sure to review the firm's 10-K. Also, the website http://finra-markets.morningstar.com/BondCenter (information below) may be of assistance.
You will need to calculate the firm's composite YTM on its bonds. This can be achieved by calculating a weighted-average YTM for its bond issues.
After calculating the YTM for the bond issues, calculate the firm's after-tax cost of debt. If the firm's marginal tax rate cannot be identified in its 10-K, assume that the tax rate will be 35%..
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