You have determined that the cost of debt for your business is 4.21%. If your firm...
You have determined that the cost of debt for your business is 4.21%. If your firm has a corporate tax rate of 35%, what is the after-tax cost of debt you would use in WACC for your firm?
Homework Answers
Answer:
Cost of debt = 4.21%
Tax rate = 35%
After tax cost of debt to be used in WACC = Cost of debt * (1 - Tax rate)
= 4.21% * (1 - 35%)
= 2.7365% or 2.74%
After tax cost of debt = 2.74%
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