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What is Cost of Debt?

The cost of debt is a calculation that determines the actual cost of a company’s debt financing.

Since interest payments are generally tax deductible, the cost of debt may not be as simple as just adding up all of the interest paid on a loan. It would have to be adjusted for the tax savings, such that it is total interest paid less the tax savings.

Keywords: debt, interest, tax deductible, cost of debt,