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Loan Note Y -8 % bank loan £4000 .
The company is paying 6% interest to the bank.
Tax is 30%.Which figure to use here for wacc
For the bank loan the cost is 6% x 0.7 = 4.2%
Loan notes are not the same as bank loans and you need to give more information to be able to calculate the cost of them.
Have you watched my free lectures? Because calculating the cost of loan notes/bonds/ debentures is all covered in detail.
(Our free lectures are a complete course for Paper F9 and cover everything needed to be able to pass the exam well.)
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