I am calculating the WACC for a foreign company. What is the best way to calculate de Cost of Debt for Chile as an example? For example, I know that the Pre tax Cost of Debt of comparable companies is 5%, what would it be the Pre tax cost of Debt for the company in Chile?

Question

anonymous · Answer

Have you tried using the DuPont Formula?

anonymous · Answer

But the Dupont formula its for calculating the ROE (Return on equity). Does it work for Debt???

anonymous · Answer

1.risk free rate+ country default spread+ company default spread( it is when you use synthetic rating)
2.use rating if available.
3.recent borrowing by the company.
(cost of debt for one comparative company does not necessarily be comparable to other. it is the function of coverage ratios, firm ability to pay off debt.(which may differ firm to firm.)