After Tax Cost Of Debt (After-Tax COD) Calculator

Calculates after-tax cost of debt for a company, considering marginal corporate tax rates.

Result Marginal Corporate Tax Rate 0% After Tax Cost Of Debt Result 0% Cost Of Debt Result 0%

Marginal Corporate Tax Rate Formula

Marginal corporate tax rate = 1 - ( Net income / Pre tax income )

1 - ( $6200 / $8700 ) = 0.28736%.Jane, a small business owner, uses the formula to calculate her company's marginal corporate tax rate using pre-tax income of $8700 and net income of $6200. The result, 0.28736%, shows that Jane's company pays approximately 0.29% in taxes on its earnings.

After Tax Cost Of Debt Result Formula

After tax cost of debt result = ( Cost of debt / 100 ) * ( 1 - Marginal corporate tax rate )

( 19% / 100 ) * ( 1 - 9 ) = -1.52%.John and Emily's after-tax cost of debt result was -1.52%. The negative result means John and Emily did not need to pay interest on their debt.

Cost Of Debt Result Formula

Cost of debt result = ( After tax cost of debt / 100 ) / ( 1 - Marginal corporate tax rate )

( 2 / 100% ) / ( 1 - 23 ) = -0.00091%.John's cost of debt result is (-0.00091%) after tax, indicating he pays less than 1% in interest on his company loans.

Meaning

The After Tax Cost Of Debt (ATCOD) is the total cost of borrowing money, expressed as an annual rate, after taxes have been deducted from the interest payments. It represents the true cost of debt to a borrower, taking into account the taxes that must be paid on interest income.