Cost of Debt Estimate Microsofts before-tax cost of debt by using the yield to maturity on its existing long-term bonds.

If the company does not have any outstanding bond issues, one can use the effective rate on the companys long-term liabilities to proxy for its cost of debt. It can be calculated by dividing the companys reported interest expense by its total long-term liabilities. Note: To obtain yields to maturity on the companys outstanding bonds, go to finra-markets.morningstar.com. Under Market Data, select Bonds. Under Search, click Corporate, and type the companys name.

A list of the firms outstanding bond issues will appear. Bond issues may be listed on multiple pages. Assume that the firms policy is to use the expected return on its noncallable long-term obligations as its cost of debt. Find the noncallable bond issue (which does not have Yes in the column titled Callable) with the longest time to maturity and non-missing reported yield. Yields to maturity are reported in the last column titled Yield. If the company does not have non-callable bonds outstanding, simply use the yield to maturity on the bond with the longest time to maturity. Collect the yield and maturity date for your chosen bond issue.

Bond Results Ratings Moody's S&P Last Sale Price Yield 139 697 2410 130.400 2.470 141.050 2.685 09.000 2320 Aaa AAA AAA WR NR WR WR NR WR NR WR NR Aaa NR Issuer Name Symbol Callable Sub-Product Type MICROSOFT CORP MSFT GC Corporate Bond MICROSOFT CORP MSFT.GH Corporate Bond MICROSOFT CORP MSFTGK Corporate Bond MICROSOFT CORP MSFT4977803 Corporate Bond MICROSOFT CORP MSFT4211170 Corporate Bond MICROSOFT CORP MSFT4307003 Corporate Bond MICROSOFT CORP MSFT4307006 Corporate Bond MICROSOFT CORP MSFT4769874 Corporate Bond MICROSOFT CORP MSFT4389675 Corporate Bond MICROSOFT CORP MSFT4451232 Corporate Bond MICROSOFT CORP MSFT.GE Corporate Bond MICROSOFT CORP MSFT.GG Corporate Bond MICROSOFT CORP MSFT.GU Corporate Bond MICROSOFT CORP MSFT3920358 Yes Corporate Bond MICROSOFT CORP MSFT9636 Yes Corporate Bond MICROSOFT CORP MSFT4000844 Yes Corporate Bond MICROSOFT CORP MSFT4000847 Yes Corporate Bond MICROSOFT CORP MSFT6077006 Yes Corporate Bond MICROSOFT CORP MSFT4977004 Yes Corporate Bond MICROSOFT CORP MSFT211183 Yes Corporate Bond Coupon Maturity 5200 0001/2009 4.500 10/012049 5.300 02082041 1625 1200 2018 1.050 to 122000 1.300 11.09.2018 2.000 11.03.2020 1.100 08:08 2019 1550 08-08-2021 11.850 02/08/2020 4200 08/01/2010 3000 10012020 4.000 02/08/2021 2.125 11/16 2022 3.500 11/15 2042 2375 05:01 2023 2.750 05:01 2043 3.625 12152023 4.975 12152045 2.375 02/122022 WR AAA WR NR 99 950 2.305 20.000 110.366 09.0122.000 99.000 30.035 90963 1.907 99.900 99.907 5.172 10000 0.473 100.01 1.887 102.114 0.141 113.654 2650 102 600 0292 111.770 2.001 100030 0.435 WR NR WR NR A AAA A AAA AAA Aa AAA 134.300 100 401 Aaa AAA 0.101 1 2 3 Next 1 of 3 Go