Corporate Finance Mock 2 Q30

CFA Level II
#1

Hi all, There is some error in it. Q stem says financed by 40% debt and calculated as 50% debt. Ok, how do you calculate interest expense on debt. Do you use coupon rate or YTM of the bond? And why? Thanks S

#2

error on mock. its ytm to calc current interest rate on bonds not coupon rate.

#3

Thanks Why? YTM is for WACC, the actual cash outflow - is it not coupon?

#4

Actual interest expense is coupon

#5

NO Interest expense is not the same as coupon interest or coupon payment

#6

Aliman, So what should go for interest expense, can you please explain. S