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Company Profile
Used to calibrate size premium & tax rate💳
Cost of Debt
Interest is tax-deductible — your real cost is lower
Interest payments on business debt are tax-deductible in Canada. This means the government effectively subsidizes a portion of your borrowing cost. The after-tax rate is the true cost.
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Use your actual marginal corporate tax rate for precise results.
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Formula: After-tax cost = Interest Rate × (1 − Tax Rate)
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Cost of Equity
Build-up method — standard for Canadian private companies
Equity doesn't have an interest rate, but it has an implicit cost — the return equity investors require. For private lower-market companies, this is estimated using the build-up method.
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Your Results
Cost of debt vs. cost of equityAfter-Tax Cost of Debt
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per year
Cost of Equity
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per year
Fill in the inputs to see your comparison
Your after-tax cost of debt will appear here alongside an estimate of your cost of equity.
Equity Cost Build-Up
| Risk-Free Rate (GoC 10-yr) | — |
| Equity Risk Premium | — |
| Size Premium | — |
| Industry Risk Premium | — |
| Company-Specific Risk | — |
| Total Cost of Equity | — |
This calculator provides educational estimates only. Industry risk premiums are derived from Damodaran unlevered betas by sector (NYU Stern, Jan 2025) using the formula IRP = (β − 1.0) × ERP, adjusted for Canadian LMM context. Tax rates are approximate (2025/2026) and should be confirmed with your accountant. Results should not be relied upon for investment or financing decisions without professional advice.
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Lifetime Cost Analysis
Debt disappears when repaid — equity stays and grows with your company
Enter the financing amount, loan term, and company valuation to compare what debt truly costs over time versus the permanent, compounding claim of equity.
CAD
CAD
Total Debt Cost (After-Tax)
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over loan term, then $0 forever
Equity Stake Sold
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permanent share of company
Implied Equity Cost — Year 1
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expected return owed to investor
Implied Equity Cost — Year 10
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grows every year as company grows
Equity Break-Even Year
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Year when cumulative equity cost exceeds total lifetime debt cost
Cumulative Cost — 15-Year Horizon
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