Question
Starbucks' many outstanding debt issues complicates the calculation of Starbucks' cost of debt for all of the following reasons except : A.Finding one yield that
Starbucks' many outstanding debt issues complicates the calculation of Starbucks' cost of debt for all of the following reasons except:
A.Finding one yield that summarizes the cost of different debt issues that have different issue amounts, coupons, yields and covenants is difficult.
b.The different coupon rates paid on Starbucks' bonds are taxable income and bondholders have different tax rates.
c.The weighted average yield to maturity across different bonds is a poor proxy for the company's cost of debt.
D. The current yield to maturity on debt outstanding is a poor proxy for the theoretical cost of the next dollar of debt raised.
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