Market Value of Debt Template

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Market Value of Debt Template

This market value of debt template shows you how to calculate the market value of debt given the FV of total debt, interest expense, cost of debt, and weighted average maturity.

Below is a preview of the market value of debt template:

Market Value of Debt Template Screenshot

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The market value of debt refers to the market price at which investors would be willing to buy a company’s debt, which differs from the book value on the balance sheet. To estimate the market value of debt, an analyst can think of the total debt on the books as a single coupon bond, with the coupon being equal to the interest expenses on all debt and the maturity as the weighted average maturity of the debt.

The bond pricing formula to calculate market value of debt is:

C[(1 – (1/((1 + Kd)^t)))/Kd] + [FV/((1 + Kd)^t)]

Where C is the interest expense (in dollars)

Kd is the current cost of Debt (in percentages)

T is the weighted average maturity (in years)

FV represents the total debt

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Below is a break down of subject weightings in the FMVA® financial analyst program. As you can see there is a heavy focus on financial modeling, finance, Excel, business valuation, budgeting/forecasting, PowerPoint presentations, accounting and business strategy.

 

Financial Analyst certification curriculum

 

A well rounded financial analyst possesses all of the above skills!

 

Additional Questions & Answers

CFI is the global institution behind the financial modeling and valuation analyst FMVA® Designation. CFI is on a mission to enable anyone to be a great financial analyst and have a great career path. In order to help you advance your career, CFI has compiled many resources to assist you along the path.

In order to become a great financial analyst, here are some more questions and answers for you to discover:

 

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