Find Job or Recruit Staff: 093 682 682 | 078 868 848 | info@pp-hr.com | Recruitment Service
Cost of irredeemable debt

Irredeemable debt is debt that has no specific redemption date or maturity period. The issuing authority or entity pays a specified interest rate periodically but provides no data on when principal will be returned. Another name for irredeemable debt is perpetual debt or consol.

As long as a company or other issuing entity does not default on the debt and pays the coupon rate as noted, the coupon payment can extend forever on irredeemable debt. The issuing entity is responsible for the coupon payments. Therefore, if it defaults, the principal on the bonds will come due.

There are two types of Irredeemable debt as follows:

1. cost of debt for irredeemable debt (no tax)

Kd = i/P0

Kd = cost of debt (required rate of return)

i = annual interest paid

P0 = ex interest market value of debt

2.Calculating the cost of debt for irredeemable debt (with tax)

Kd = i(1-t)/P0

Kd = cost of debt (required rate of return)

i = annual interest paid

P0 = ex interest market value of debt

t = corporation tax rate

Leave your thoughts

Find Jobs Here !

Phnom Penh HR Service

1. Recruitment Service
2. Cambodia Tax Consulting
3. Accounting Service & System
4. Outsourcing Service
5. Internal Auditing Service
6. HR Consulting
7. Practical Job Training
Services by ACCA | CPA,Tax Agent
Diploma in Cambodia Tax,and MBA
**Contact Us Via 093 682 682
078 868 848| info@pp-hr.com
SHARE