# How to Calculate The Cost of Debt?

Tutorial on how to calculate cost of debt.

## Methods for Calculating Cost of Debt

**Cost of Debt **is the cost a company spends paying interest on its debts. Cost of debt is usually expressed as percentage. Cost of Debt is calculated as before-tax cost or after-tax cost which are the methods for calculating cost of debt. But since the interest is deductible for income taxes, the after-tax rate cost of debt is usually taken into account. In this tutorial we clearly explained on how to calculate the cost of debt.

The **before and after tax returns of cost of debt** can be calculated using separate formula. Click on the below links to navigate to respective pages to learn in detail.

Cost of Debt - Before-tax return

Cost of Debt - After-tax return