The formula to calculate the cost of debt is:
\[ \text{CoD} = \text{IE} \times \left( 1 - \frac{\text{TR}}{100} \right) \]
Where:
A cost of debt is a measure of the minimum rate of return a holder of debt must return to accept the liability.
Let's assume the following values:
Using the formula:
\[ \text{CoD} = 1000 \times \left( 1 - \frac{30}{100} \right) = 700 \]
The cost of debt is $700.
