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Cost of debt in case of interest free loan
Hello Experts,
What would be the Cost of debt in case no interest is being serviced on the unsecured loan raised by a private limited company. The said kd needs to be factored into wacc calculations for DCF valuation.
Replies (1)
I(1-40%)= 0. The aggregate of debt is preference share capital+debentures+loans. I’m not sure about unsecured loans. Wacc will decrease due to Kd being zero.
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