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Dear Mr. Moffat,
Would You be so kind to explain how to treat loan with variable rate when calculating cost of debt? In case when there is no interest rate given.
Best regards, Maria
It depends what other information there is in the question.
If you are given the current interest rate then you would use that (obviously net of tax relief). If you are not given the current interest rate but there was other debt borrowing, then you would use the cost of the other debt borrowing.
But again, so much depends on what other information there is in the question.
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