sdada

But simply put : cost of debt: is what is paid to the suppliers to obtain those funds which is essentially the interest component. So reducing the interest by tax (as mentioned by MFIN in his/her example) although makes sense -but why is it being treated as the actual cost when in effect the company did end up paying $1M and not $1M-$400K=$600K. I cant quite digest this fact. The tax relief that it got was a tax credit provided by the govt and should be seen as basically the company paying less in tax (not less in interest and hence the cost of debt)