How Do You Determine the Appropriate Cost of Debt for a Company?

debt

Cost of Debt Estimation – How do you determine the appropriate cost of debt for a company? Does it make a difference if the company’s debt is privately placed as opposed to being publicly traded? How would you estimate the cost of debt for a firm whose only debt issues are privately held by institutional investors?

One thought on “How Do You Determine the Appropriate Cost of Debt for a Company?

  1. In my personal opinion, I would suggest that an appropriate debt to revenue ratio for a business should be less then 20%. The reason I suggest this is so that they can direct other funds towards and expansion fund. That way they can expand or invest in other forms of revenue if the opportunity arrises without having to incur more debt.

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