Is there a specific formula?
If the firm has bonds outstanding, and the bonds are traded, the yield to maturity on a long-term, straight (no special features) bond can be used as the interest rate. If the firm is rated, use the rating and a typical default spread on bonds with that rating to estimate the cost of debt - Rf + default spread.
I’ve seen somewhere the estimation of the Ke with a Bond’s yield+ equity risk premium approach, so I guess we could also solve:
Bond’s yield (Kd) = Ke-ERP
What context?
right, page 84 equity gives the way bond yield plus risk premium approach to calculate cost of equity.
Could possible be company-specific if there’s enough seasoned tenors.