Ask questions about the cost of bond funds in financial management

There is an essential difference between these two formulas.

The first formula is used when investing in bonds, which is used to calculate whether the bond has investment value at this time. If the calculated expected rate of return is less than the investor's cost of capital rate, the investor will definitely not invest. (As long as the bond is not due, this formula can be used, and the subject of the bond is the company that invests in the bond).

The second formula is used to calculate the bond financing rate when raising funds. (Generally, it is just starting out, and it is only used when it is ready to issue bonds, and the main body of use is the company that issued the bonds).

The investor's cost ratio is the combined cost, which is the weighted average of the cost of capital.

For example, if the financing is 100w, the bond financing is 80w, the cost is 8%, and the common stock financing is 20w, the cost is 14%, then the comprehensive cost = 8% * 80% 14% * 20% =

The first formula is generally used to find the value of a bond, which is understood in the case of the cost of capital

For the owner of the fund (that is, the person who buys the bond), KB is the return on investment he requires, and for the user of the fund, the KB in the formula is the cost of funds he uses the bond purchaser's funds, so at this time, if you know the buyer's purchase of the bond, you can use this formula to find KB, which is equivalent to finding the cost of capital.

The meaning of this formula: for the annual interest repayment and principal repayment of the bond, its value is composed of two parts, 1) the annual interest 2) the income at the time of principal repayment, so the present value of the bond can be discounted from the annual interest income and the income at the time of principal repayment until now, for the annual interest is discounted by the method of annuity, and the income at maturity is discounted by the method of compound interest present value.

The cost of capital calculated by these two formulas should be equal. Let's talk about it.

The answer given upstairs is correct:

1) Long-term borrowing capital cost rate Borrowing interest rate (1 income tax rate).

2) Bond funding cost ratio (bond par value coupon rate) (1 income tax rate) [bond issuance** (1 bond financing rate)].

3) There are several formulas for calculating the cost of capital ratio of common stock**:

Commonly used are: Risk-free Rate Beta (Market Rate of Return Risk-Free Rate).

If the dividend is fixed, then: Common Shares** Cost of Funds Ratio Fixed Dividend per Year [Common Stock Issuance** (1 Common Share Financing Rate)].

If the dividend growth rate is fixed, the common stock** cost of funds ratio Expected first-year dividend [common stock issuance** (1 common share financing rate)] Dividend fixed growth rate.

4) The cost of capital ratio of retained earnings is basically the same as that of common equity**, except that the financing rate does not need to be considered.

Formula for calculating the cost of bond funding.

Since interest expense is included in the pre-tax cost expense, it can play a role in deducting income tax. Therefore, the calculation formula for the cost of borrowing or bonds based on one-time principal repayment and interest payment in installments is as follows:

where: KB--- cost of bond capital;

IB--- annual interest on bonds;

t--- income tax rate;

b--- amount of bond proceeds; (or the principal amount of the debt).

FB --- bond financing expense ratio (= financing cost Total amount raised).

Or. <>

where RB --- bond interest rate.

100* (Shi Jima.

k is the cost of capital, to illustrate, Shi Jima is an accumulation symbol, I won't play that symbol, sorry, i is the year,

A company issues a 5-year bond of 5 million yuan at par value, with a coupon rate of 12% per annum, an issue rate of 3%, and an income tax rate of 33% to calculate the cost of bond capital.

kb=[ib*(1-t)] b*(1-fb)] or kb=[rb*(1-t)] 1-fb).

KB Bond Funding Cost IB Bond Annual Interest T Income Tax Rate B Bond Financing Amount FB Bond Financing Expense RB Bond Interest Rate.

The above question uses the formula of 2:

kb=[rb*(1-t)]/1-fb)

kb=[12%*（1-33%]/1-3%）kb=

500 * million yuan.

This is the formula for the cost of capital.

The cost of funds is calculated as the cost of funds for the year, not the cost of funds for the holding period.

Therefore, when calculating, only one year's interest needs to be considered.

Factors influencing the value of a bond: interest paid over time, yield due to time.

Present value of the bond = present value of coupon + present value of face value.

The above present value is calculated as a function of interest, maturity, and yield. Here, because the Nth power cannot be expressed when input, it will not be listed, and the specific formula will be checked up.

That formula in the book is correct.

The notional cost of a bond generally refers to the interest rate stated on the bond. The pre-tax cost refers to the actual cost payable before the income tax is not deductible, which is larger than the after-tax cost. The actual cost refers to the handling fee at the time of bond issuance.

or the actual cost incurred after issuance, due to changes in market interest rates or other reasons.

The $5 is a handling fee for the issuance of bonds.

At that time, the 5 yuan was from 116

Yuanzhong. deducted, so the actual income is. 111 yuan.

1 The entries that are all as trading financial assets are:

Borrow: Tradable financial assets – cost 1080

Borrow: Investment income 20

Credit: Bank deposit 1100

The entries that are available as financial assets are:

Borrow: For ** financial assets - cost (face value) 1000

Borrow: For ** financial assets - interest adjustment 100

Credit: Bank deposit 1100

The entries that are held to maturity investments are:

Borrow: Held-to-maturity investment – cost (par value) 1000

Borrow: Hold to maturity investment – interest adjustment 100

Credit: Bank deposit 1100

Reminder] The initial recognition amount of trading financial assets shall be based on the fair value at the time of acquisition, and the amount of the initial recognition shall be the sum of the fair value and related transaction costs at the time of acquisition.

This statement is true.

So, why is the cost of financial assets available for **, held-to-maturity investments - 1000?

Tips] Here is only its face value is 1,000 yuan, but its cost should also include another detailed account: "interest adjustment", and the interest adjustment is also counted, which is to respond to the above sentence: the sum of fair value and related transaction costs as the initial recognition amount.

Your misconception is that cost is only understood as face value, but in fact it should also include interest adjustments, and the two add up to the full cost. If you look at the entry above, the balance of the general ledger account is 1,100 yuan, that is, the cost is 1,100 yuan.

In addition, as for the cost of trading financial assets, some people say that it is 1000 according to the face value, and some people say that it is 1080 according to the actual payment minus the transaction fee, which makes me very confused and asks for an answer.

Reminder] For trading financial assets, the accounting standards do not stipulate that there is a sub-account according to the face value, so the "face value" sub-account can be omitted, but the difference between the face value excluding the transaction cost and the interest that has been paid but not yet received is packaged and recorded in the "trading financial assets - cost" account.

However, for available-to-maturity and held-to-maturity it is necessary to itemize the face value separately.

Cost of capital = fund raising fee + capital occupation fee. Capital cost rate = capital occupation fee * 100%.