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Posted on Jun 17, 2024

Hi there, Just wondering, if i am doing a calculation on cost of debt but the company is currently transforming in to a zero-leverage firm.

Hi there,

Just wondering, if i am doing a calculation on cost of debt but the company is currently transforming in to a zero-leverage firm. What would be the answer? As Cost of Debt= Interest Expense / Total debt, but when total debt is zero. It became interest expense/0, but anything divide by zero would result in math error. So what should i do at this point?

Regard

Chris

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