A firm has $3 Billion in debt outstanding with a yield to maturity of 5%
A firm has $3 Billion in debt outstanding with a yield to maturity of 5%. The form pays taxes at the rate of 36%. What is the firm's effective (after-tax) cost of debt? [Enter your answer as a percentage rounded to two decimal places.)
Homework Answers
Firms Effective (After Tax) Cost of Debt
Firms Effective (After Tax) Cost of Debt = Yield to maturity x (1 – Tax Rate)
= 5.00% x (1 – 0.36)
= 5.00% x 0.64
= 3.20%
“Hence, the Firms Effective (After Tax) Cost of Debt will be 3.20%”
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A firm has $3 Billion in debt outstanding with a yield to maturity of 5%
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