After-Tax Cost of Debt Calculator
FinanceCalculate a company's after-tax cost of debt, accounting for the tax deductibility of interest expense.
After-Tax Cost of Debt
The effective cost of debt financing after accounting for the tax shield from deductible interest.
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Frequently Asked Questions
How is after-tax cost of debt calculated?
After-Tax Cost of Debt = Pre-Tax Cost of Debt x (1 - Tax Rate). Since interest expense is tax-deductible for most companies, the real cost of debt financing is lower than the stated interest rate.
How do I find my marginal tax rate if I don't know it directly?
Marginal Tax Rate = 1 - (Net Income / Pre-Tax Income), derived from a company's own income statement -- useful when the applicable statutory rate isn't directly known.
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