QUESTION 4 What is the after-tax cost of debt for a firm in the 30% tax...

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QUESTION 4 What is the after-tax cost of debt for a firm in the 30% tax bracket that has a 15% before tax cost of debt? 3.6%

Answer 1

Answer #1

Before Tax cost of debt = 15%; Tax bracket = 30%

After Tax cost of Debt = Before tax cost of debt * (1- Tax %) = 15% * (1 - 30%) = 10.5%

Answer: After Tax Cost of Debt = 10.5%

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Answer 2

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