U
uktous
Member
hi, the code reading mentioned about the gross cost of the debt, but I am not too sure about what it actually mean.
I have 2 questions
(1)
Suppose I borrow £100 at time 0 and repay it by a lump sum of £110.25 at time 2.
What is the gross cost of debt?
= ( 110.25 / 100 ) ^ 0.5 - 1 = 5% ?
(2)
Since the capital to finance a project is just that £100 borrowed, is the weighted cost of capital = 5%?
I have 2 questions
(1)
Suppose I borrow £100 at time 0 and repay it by a lump sum of £110.25 at time 2.
What is the gross cost of debt?
= ( 110.25 / 100 ) ^ 0.5 - 1 = 5% ?
(2)
Since the capital to finance a project is just that £100 borrowed, is the weighted cost of capital = 5%?