The cost of debt most frequently is measured as
a. Actual interest rate.
b. Actual interest rate adjusted for inflation.
c. Actual interest rate plus a risk premium.
d. Actual interest rate minus tax savings.
Answer:D
Answer (d) is correct.
The requirement is to identify the most frequent measure of the cost of debt.
Answer (d) is correct because the most frequent measure is the after-tax interest rate.
Answer (a) is incorrect because the actual rate ignores the tax benefit of the debt.
Answers (b) and (c) are incorrect because these are not common measures of the cost of debt.