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Finance Calculators

Cost of Debt Calculator

Verified formula Updated Jun 2026 Private — runs on your device

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Verified formula Private

After-tax cost of debt

3.5000%

Pre-tax cost of debt
5.0000%

For general information only — not financial, tax, legal or medical advice. Verify before you rely on it.

How to use the Cost of Debt Calculator

The Cost of Debt Calculator works out your after-tax cost of debt, along with 1 related figure in an instant. Enter annual interest expense, total debt and tax rate and the result updates as you type — it is free, needs no sign-up, and runs entirely in your browser so your figures stay private.

  1. Enter the annual interest expense.
  2. Enter the total debt.
  3. Enter the tax rate.
  4. Read off your after-tax cost of debt, together with pre-tax cost of debt — the calculator updates automatically, with no button to press.

Formula

The Cost of Debt Calculator uses the formula:

After-tax cost of debt = Annual interest expense ÷ Total debt × 100 × (1 - Tax rate ÷ 100)

Worked example

For example, with annual interest expense of 50,000, total debt of 1,000,000 and tax rate of 3%, the after-tax cost of debt is 3.5000%.

Inputs used
Annual interest expense 50,000
Total debt 1,000,000
Tax rate 3%
Results
After-tax cost of debt 3.5000%
Pre-tax cost of debt 5.0000%

Results are estimates for educational use, not professional advice.

Frequently asked questions

Divide interest expense by total debt for the pre-tax rate, then multiply by (1 − tax rate) for after-tax. 50,000 on 1,000,000 at 30% tax is 3.5% after tax.

Interest is often tax-deductible, so the real cost to the company is lower than the pre-tax rate.

It is a key input to the weighted average cost of capital (WACC) used in valuation.

Generally yes, as it means cheaper borrowing, though the right level of debt depends on the business.

Enter the annual interest expense. Enter the total debt. Enter the tax rate. Read off your after-tax cost of debt, together with pre-tax cost of debt — the calculator updates automatically, with no button to press.

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