FIN 401 - WACC (Cost of Debt) - Ryerson University
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People are looking for the formula to get the value i. Without financial calculator you could use the formula.
i=[PMT+(FV - PV)/N] / [(FV + PV)/2]
Note that--> in this formula for approximate calculation of "i" we dont take the negative value of PV as shown in the video.
Hope it helps.
very useful..Thanks
Thank you .
Very useful thank you
Very good
I like it
Hi Patrick, Just so that you know, your videos are MUCH appreciated and some of the BEST on the web. I REALLY appreciate them and get HUGE value from them. Incredibly well explained. When I watch them I marvel (and am thankful) that there are a few people that have a gift of taking something dry, and difficult to understand, and bring them alive and makes the subject matter so clear and intuitive. (And incidentally I'M INTERESTED in the subject matter- I can only imagine how people who are NOT interested in the subject matter, how their eyes glaze over, and the subject matter is completely impenetrable to them) Anyway, I know that I speak for all of the approximately 50,000 people who have viewed this video. Your videos are Amazing! You deserve all the Kudos that you get.
you are a legend, youre a better teacher than most of the lecturer out there
thank you so much
Thank you. I could understand 'indifference points -breakeven eps' very well through your video. I'm back again to understand WACC. your lecture is very good to me cuz you don't assume all of us know some basic math.
You teach this in a much more relatable way than my teacher did
Thanks so so much.This video has cleared my confusion.May the Lord give you more strength to continue doing more videos.This is awesome🤗👍
This one video taught me better than I learned from many lectures
You're killing it man!! Thank you and keep making videos!
The best teacher ever.
Thank you for sharing. You are very thorough and easy to understand. Love your videos, they have help!!
This legend is a better teacher than my lecturer,, but shes hotter so i will still be going to class.. thanks brother
Omfg bru
😄😄😄😄😄😄😄
Bro. Love ur stuff. It helped my fin paper. With love from Singapore!
Sick dude, glad it helped!
thank you very much all of your vidoes from the lesson WACC was really really helpful. Many thanks and regards from Sri Lanka , hope you are keeping safe during this Covid 19 pandemic. God bless you
Very helpful in 7 minutes. Thank you.
saved my life in finance
this actually made things so clear for me, thank you so much!
Bro! really appreciate your content. Thanks.
Good stuff. Saved my ass 10 mins before my exam
Thank you, your videos are great
Hi everyone, many people asking how do I solve for I?....you can't solve for the interest rate by hand! You have to use a financial calculator, excel or whatever else can do the calculation! When I write down the parameters (FV, PV, N, PMT, I) on the board, those are the inputs for the financial calculator.
Yes, but... whats the formula for the calculator?
there is no formula on the calculator. If you have a financial calculator, then it will have keys such N, I/Y, PV,FV,PMT all you have to do is input these numbers and calculate it. @@samb.4260
@@hellobye50 in what format do you input those
How did you compute the "I" by not using Excel or Financial Calculator. Just using a BASIC CALCULATOR. THANKYOU
Finding your videos really helpful. One question though, Finance Exam coming up in my Business Degree. We can't use financial calculators with those keys so have to put in a formula, can you tell me what it would be for this? I can't figure it out?
You explained well but why did you skip the math part for solving the YTM? You said to input into the calculator but what bout the actual math so I can grasp the concept of how you got that 4.21%?
Hello I am from malaysia..Your video very helpful..thanks so much
@AllThingsMathematics Hi Patrick, Can you please explain why the rD here is expressed as an APR? And in WACC sample question # 3, the rD is expressed as an EAR? Thanks
This is awesome. Thanks for the video
Almost cried prepping my exams on Monday watching my lectures and couldn't figure out the cost of Debt. YOU ARE A LIFE SAVER
Thanks.
Although you didn't show the workings for the interest. That could have been helpful
Great video and explanation. Better than my professor.
Happy it helped :)
You are a life saver
Patt, Great stuff. Just curious if a firm issues debt of different durations, how do we calculate the cost of debt in this case? lmk thanks
What do you do if you have more than one bond issuance? I'm assuming that you add the two yields and the two different bond issuance amounts.
Question: if we have a floatation cost, for shares, do we reduce it from the Bond price?
My calculator spits out the annual rate of 8.4%, not the semi-annual rate of 4.2%. Even though I inputted exactly how he said with semi-annual payments and amounts. So some calculators will give the annual rate even though you input the semi-annual data, just fyi. Maybe there's a way to change that setting on the calculator?
awesome stuff!
Im a newbie can you show how to solve for interest. I think I'm doing something wrong when entering this into the calculator. Can you explain the steps for the calculator?
THANK YOU SO MUCH.
what if we are building a model from scratch and need to know what the bond price is
I can't find chapter about value of bonds, where can i find it ?
Really informative
Why is the Cost of Debt constant no matter how much debt a company assumes?
AWESOME...
So what’s the impact of cost of debt on wacc?
you didn't show how you got the i so how is that meant to help, it doesn't help
can any one answer the following question
1. Why is the after tax cost of debt rather than it’s before tax cost used to calculate the weighted average cost of capital?
2. Dose the component cost of preferred stock include or exclude flotation costs? Explain
3. Why is no tax adjustment made to the cost of preferred stock?
You are awesome!!!!
thank you so much
amazing!!!
how did you get the 4.21%? I'm confused bro
The greatest video
Hi, what do you do if you have two bonds? Would you subtract the rD total for one from the other and the same for the cost of equity? I'm very lost on how to approach this and I haven't been able to find answers anywhere.
Hey, if you have two bonds you would calculate the cost for each bond separately. They would each have their own cost.
For WACC then you’d have to calculate the Market Value of each bond (being the PV of (820) in this example. THE Market Value will guide you to what weight to use. Even if the company uses a target capital structure
How did we get to that 4.21 on interest can someone assist
This was really clear.
Hi you could have put in a formula form to give idea wat to add
what is fomula to get i ??
Is there formula for that ‘I’ ?
What'is I and how to caculate?
it is very helpful I thank you
Sooooo clear
how did you calculate'' I ''????
How about the zero coupon bond cost of debt ?????? Urgent for exam thx 🙏🏼🙏🏼🙏🏼
4.21 CANT SEE WHERE YOU GOT IT FROM?
use a financial calculator and plug in all the variables, usually excel does it.
can you prove o us that cost of equity is more expensive than coat of debt please with a lot of thanx
Great video, thank you!
how did you got 4.21%?
How can we solved YTM without using Financial calculator plz anyone ??
i dont understandhow you got the pv of pmt you just wrote the answer and jumped to the next thing
hello! you are a monster teacher! keep it up! one question, which is the video explaining what the bond is? thanks a lot
When they give you a portafolio of bonds, I have to find the ytm of the portafolio, right? and thats my rd.
Thanks so much bro we are not allowed to use financial calculator how to do that with normal calculator?
Anuity formulas
How you calculate the" I", can you explain that further?
use a financial calculator
Hoping you did not use calculator.
If half year rate (6 months) = 4.21%, the annual rate would not be 4.21%* 2 = 8.42%? Wouldn't it be (1.0421)^2 = 1,0864 = 8.64%?
No *2 is correct
Ryan Allain so no compound interest?
the cost of debt that i calculated is 4.12%x2=8.24%.
same omg! i used the YTM formula.
he messed up with 4.21 and 4.12 the answer is 4.12
where do i find the bonds chapter you keep referring to"?
Please how did you get the 4.21 ?
You input these numbers into a financial calculator and it gives you the Interest rate ( in this case, semi-annual cost of debt ).
my guy
Should the yield to maturity be 4.12? Is 4.21, right?
I got 4.12 too, input error
Also got 4.12
How did you get the 4.21
Shouldn't the annualized rate be (1.0421)^2-1 = 8.60%?
That`s what I am thinking, cause if we multiply by 2, it will be nominal rate/year, however, in term of valuing, we need effective interest rate/year right? So why here we use nominal? If you have any ideas, please tell me too. Much Appreciate.
Yep that is correct because irr assumes periodic compounding
Please how did you get 4.21
And what about where a tax rate is given
Sorry, doesn't cost of debt include loans and bonds. Do you only take into account the yield to maturity on bonds and ignore interest on loans?
if they give you different types of debt, then just find a weighted average of the interest rates to get the overall cost of debt, weighted by the market values
Yo, are you entirely sure this is 4.21? I get:
PMT = -30
FV = 1000
PV = -820
N = 24
i = 2.458 semiannual * 2 = 4.916
Cheers mate! Nice videos. Carry on.
Never mind me bruv. Just realized this wasn't a bloody mortgage and PMT must be positive. Again carry on mate! Awesome channel (Y)
pmt is 30 not -30 thats where yu got it wrong
how did you get 4.21,,,
You plug in the information in a financial Calculator. Because it says semi-annual in the question though, some of them are affected. For instance, N is the years, and our years here is 12 years. If it was yearly we would just use 12. Since it is semi-annual we multiply by 2 which is 24 as you see in the video. Future value is assumed as 1000 since they didn't give us an actual number. PV is 0.82 x 1000 = 820 but we put it as a negative. PMT is the coupon (6%) x FV (1000) which is 60, but we divide it by 2 because it is semi-annual. Now that we have the numbers, you take the calculator in order that you have in the calculator, which is usually N I/YR PV PMT FV. So plug 24 and then N, then ignore the second one because that is what we are trying to solve. Plug the -820 then press PV. Plug the 30 then press PMT. Plug the 1000 then press FV. Then simply press I/YR which will give you the 4.21. Then do as the video says and multiply it by 2 since it is semi-annual.
Hey man this video is amazing u got a New Sub with me Bro 🥃🥃‼️
sir i need one case study solution ! please help us ! itx my assignmnt and towmoro last date for submision so plz save us
Why so many indians make videos like these and watch them? Glad there is one uploader I can bear to listen to and understand but he didn't take into account the tax rate
Uyinqawa bra
thank you much helpful.
HOT & SMART
i need your help bro