Cost of Debt Calculator
Calculate pre-tax and after-tax cost of debt using effective interest rate and YTM methods.
Company Debt Data
$
$
%
Bond YTM Calculation (Optional)
$
$
%
years
After-Tax Cost of Debt
5.63%
Moderate - Average credit
Pre-Tax Cost
7.50%
Tax Shield
1.88%
Cost of Debt Analysis
Pre-Tax Cost (Effective Rate)7.50%
Tax Rate25%
Tax Shield Benefit-1.88%
After-Tax Cost of Debt5.63%
Bond YTM Method
YTM (Approx.)5.25%
After-Tax YTM3.94%
Debt Summary
Total Debt$2.00M
Annual Interest$150K
Annual Tax Shield$38K
Credit Spread (vs 4% Rf)3.50%
Formula: After-Tax Rd = Pre-Tax Rd × (1 - Tax Rate) = 7.50% × (1 - 25%) = 5.63%