Calculate the aftertax cost of debt under each of the following conditions. (Do not round intermediate...

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Calculate the aftertax cost of debt under each of the following conditions. (Do not round intermediate calculations. Input yo

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Answer 1

Answer #1

Aftertax cost of debt = Kd(1 - tax)

a. Aftertax cost of debt = 0.12(1 - 0.34) = 0.0792 or 7.92%

b. Aftertax cost of debt = 0.13(1 - 0.20) = 0.1040 or 10.40%

c. Aftertax cost of debt = 0.12(1 - 0) = 0.1200 or 12.00%

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Answer 2

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