I have a couple of questions pertaining to calculating Cost of Debt while doing a
The company has a bunch of preferred financing.
Series A preferred - 28mm (7.85% PIK rate)
Series B preferred - 19mm (7.3% PIK rate)
1) So should I include this in the cost of debt calculation for or as part of Cost of Preferred ?
2) For calculation of the company's Debt/Equity composition, should this preferred be considered as Debt or as Equity ?
3) When calculating the WACC, is it more accurate to take the median of the Debt/Equity of comparable public of the private company or just use the Debt/Equity numbers provided in its business plan ?
Also the company has a term loan for $75mm and letter of credit for $37mm. The term loan has a 7.5% interest rate while the letter of credit has a interest rate of 4.5%. Should I include the letter of credit in the cost of debt calculation ?
I have a tight deadline so any thoughts/advice would be really appreciated.