Cost of Debt Calculator

Calculate pre-tax and after-tax cost of debt using effective interest rate and YTM methods.

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Important Financial Disclaimer

This calculator provides estimates based on standard financial formulas from verified references. Results are for informational and educational purposes only and should not be considered as professional financial, investment, or tax advice.

For important financial decisions such as loans, investments, mortgages, retirement planning, or tax matters, please consult with qualified financial advisors, certified financial planners, or licensed tax professionals who can review your specific situation.

Calculations may not account for all variables specific to your circumstances, local regulations, or current market conditions. Always verify results and consult professionals before making financial commitments.

Not a substitute for professional financial advice

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 Γ— (1 - Tax Rate) = 7.50% Γ— (1 - 25%) = 5.63%

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