How do I calculate the pre-tax cost of a bond loan? Is it the same with...

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How do I calculate the pre-tax cost of a bond loan? Is it the same with...

How do I calculate the pre-tax cost of a bond loan? Is it the same with the YTM?

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Answer 1

Answer #1

Pre tax cost of bond is the rate of return which the investors of the bond require from the bond and which is used to find the current price of the bond. This is same as the yield to maturity i.e. YTM because this is the return which the investors gain till the maturity of the bond.

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