Cost of debt yield to maturity. If you wish to continue without changing your settings, we will assume you are happy to receive all cookies.
Yield to maturity YTM equals the internal rate of return of the debt, i.
In this case, YTM is known as the gross redemption yield.
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This is before tax cost of debt capital and therefore, it is not the real cost of capital for us.
Although yield to maturity represents an annualized rate of return on a bond, coupon payments are usually made on a semiannual basis, so YTM is calculated on a six-month basis as well.
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Taking the example from above where the cost of debt on a bond is 6.
However, there is a trial-and-error method for finding YTM with the following present value formula:
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