- 1). Calculate the real resources cost of the investment. The real resource is the amount that the creditors have invested. Add 1 with the risk-free rate of interest, then divide that number by 1 minus the actual premium (see reference 2).
- 2). Subtract this solution by 1 to figure out the real resources cost. The risk-free rate is the basis of the assets, but it includes the risk premium (see reference 3).
- 3). Calculate the default risk premium. Take the real resource cost and subtract it by the risk-free rate of the interest. The calculation must be in percentage or decimals.
- 4). Complete the calculations by adding the risk-free rate to the default risk premium.
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