hello! out of sudden, it flashed across my mind..
do we usually use interest rate for cost of debt?
so let's say if we had 2 types of debt, one had interest rate of 10%, the other one of 20%..
then we sum up those two interest rates for cost of debt?
haha thanks !
| +251 | Why UBS Is the Worst Place to Start Your IB Career | 37 | 6h |
| +198 | UBS 2nd Year Analyst Q&A (2026) | 36 | 8h |
| +68 | Firm Thinks I'm Lying About Offer | 20 | 1d |
| +60 | Indiana University Fraternity Pipelines | 36 | 19h |
| +50 | Rogo AI | 20 | 1d |
| +50 | Elite Boutique interview questions | 15 | 6h |
| +45 | Suspended for a Year | 19 | 1d |
| +39 | Stay at Weak Dealflow Team or Lateral? | 12 | 2d |
| +27 | What's your craziest "hardo" story? | 4 | 3h |
| +25 | Wolf of Wall Street vs. Reality: Anyone else feel scammed by the movies? | 8 | 15h |
Career Resources
Get instant access to lessons taught by experienced private equity pros and bulge bracket investment bankers including financial statement modeling, DCF, M&A, LBO, Comps and Excel Modeling.
Yes, you would use the interest rate on your debt as cost of debt, since this is the return which debtholders expect from lending funds.
If you have a number of debt facilities on your books, you would typically use the blended interest rate as your cost of debt.
You don't sum them up. Your cost of debt is not 30%, you might take the average of the two, so 15% if they both have equal amounts of debt outstanding
Actually, in technical terms, you should calculate the compound average of the 2 debt lines. So: Cost of debt = Interest rate A x (Debt A / Total Debt) + Interest rate B x (Debt B / Total Debt)
Inventore accusamus minima minus enim facilis qui enim. Atque molestiae placeat aut eum aut. Quam quaerat harum aut optio aut ratione placeat.
Deleniti maxime voluptas dolore dolor consequuntur autem. Ab quidem quis accusamus porro dolore iste et. Dolorem quis nobis voluptatum corporis repellat enim.
Cumque dolores dolore recusandae voluptas aut qui. Placeat voluptas qui temporibus aut corrupti minus maiores. Veniam officia quia distinctio.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...