a firm has $ 8 Billion in debt outstanding with a yield to maturity of 4%. The firm pays taxed at the rate of 36%. What...
a firm has $ 8 Billion in debt outstanding with a yield to maturity of 4%. The firm pays taxed at the rate of 36%. What is the firms effective (after-tax) cost of debt?
Homework Answers
After Tax cost of Debt = YTM (1-Tax Rate )
= 4% * ( 1 - 0.36)
= 4% * 0.64
= 2.56%
AFter Tax Cost of Debt is 2.56%
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