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To calculate the weighted average cost of debt, we take the percentage of the total debt represented by each issue and multiply by the yield on the issue. We then add to get the overall weighted average debt cost. We use both book values and market values here for comparison. The results are as follows:

Weighted Average Debt Cost (% of total x

Book yield to maturity)

Weighted Average Debt Cost (% of total x

Book yield to maturity)

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