For the purpose of estimating the firm's cost of debt for a project, one could observe the yield-to-maturity on recently issued bonds with a similar rating and term-to-maturity.

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Quizplus · Accepted Answer

The yield-to-maturity on recently issued bonds with a similar rating and term-to-maturity is a good proxy for estimating a firm's cost of debt for a project, as it reflects the current market rates for debt with similar risk and duration characteristics.

For the Purpose of Estimating the Firm's Cost of Debt