A Model for Estimating the Cost of Debt for Practitioners

Abstract Currently, there lacks a practical model for managers to use for estimating their cost of borrowing,which is essential for helping them to make ,sound capital structure decisions. This paper is a ,giant step forward ,in developing ,a simple ,model ,which ,practitioners can use for estimating the cost of borrowing at various level of debt. In this paper, a new type of yield curve, which will be referred to as the leverage yield curve is