What is the after-tax cost of debt for a firm in the 30% tax bracket that pays 12% on its debt?
A. 5.25%
B. 8.40%
C. 9.75%
D. 12.17%
E. 20.25%
Answer Option B 8.40%
Explanation
After tax cost of debt = cost of debt x (1- tax rate)
= 0.12(1-0.3)
= 0.084~ 8.4%
What is the after-tax cost of debt for a firm in the 30% tax bracket that...
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