When attempting to determine the appropriate cost of debt for a company,which of the following methods would not be considered valid?

Question

Quizplus · Accepted Answer

Calculating the average coupon rate of all debt securities issued by the firm would not be a valid method for determining the appropriate cost of debt. This is because not all debt securities may have the same level of risk, so using the average coupon rate of all securities would not necessarily reflect the appropriate cost of debt for the company. A more appropriate method would be to use the current market interest rate and adjust it based on the company's credit rating. Option A and B are both valid methods.

When Attempting to Determine the Appropriate Cost of Debt for a Company,which