Cost of debt
You'll learn how to calculate the cost of debt—a key component of weighted average cost of capital (WACC) in corporate finance.
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In this lesson
- 0:00 Cost of debt introduction
- 0:11 Types of debt instruments
- 0:35 Market pricing and valuation
- 1:03 Finding cost of debt from returns
About this lesson
This video explores why different debt instruments (irredeemable, redeemable, convertible debt and preference shares) carry different costs, and shows you how to use current market prices and discounted cash flow principles to find the required return investors demand. Understanding cost of debt is essential for valuation, investment appraisal and financial strategy decisions across CIMA and ACCA qualifications.
Duration: 1m
Transcript
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