Which of the following will directly impact the cost of debt?
A) Capital Structure
B) Debt Ratio
C) Coupon Rate
D) Competition within the industry

Question

Quizplus · Accepted Answer

The coupon rate is the interest rate that the company pays on its debt. A higher coupon rate would directly impact the cost of debt as it would increase the amount of interest the company must pay. A lower coupon rate would decrease the cost of debt. The capital structure and the debt ratio may indirectly impact the cost of debt, while competition within the industry may have little to no impact on the cost of debt. Therefore, the best choice is C (Coupon Rate).

Which of the Following Will Directly Impact the Cost of Debt