Cost of Debt
What the company would pay to borrow today, not what it is paying on debt raised years ago. Best read as the yield to maturity on its traded bonds; failing that, the risk-free rate plus a spread for its credit rating; failing that, a synthetic rating built from interest coverage. Enters the WACC after tax, because interest is deductible.
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This term comes up constantly in valuation interviews and on the desk.
DCF interview questions guideRelated Valuation terms
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