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Divide the company's effective tax rate by 100 to convert to a decimal. For example, if the company pays 29 percent in taxes, divide 29 by 100 to get 0.29.
Subtract the company's tax rate expressed as a decimal from 1. In this example, subtract 0.29 from 1 to get 0.71.
Divide the company's after-tax cost of debt by the result to calculate the company's before-tax cost of debt. In this example, if the company's after tax cost of debt equals $830,000, divide $830,000 by 0.71 to find a before-tax cost of debt of $1,169,014.08.
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How do you calculate DBR?
The way to calculate DBR (Debt Burden Ratio) is to take all of a persons debt burden and add it together. Next, divide that debt burden by the after-tax income. This is the DBR.
What does 4 percent mean in sales tax?
Multiply the pretax price by 0.04
How much is 6.5 percent in sales tax?
Multiply the pretax price by 0.065.
How do you calculate cost price?
Total cost price = Material cost + labor cost + overheads costs
What is the formula used to calculate debt ratio?
Debt ratio to determine the strength of a companies financial strength is calculated by taking all the companies debts and dividing it by total assets.
