After-tax cost of debt. Given the following: Yield to maturity (Before tax cost of debt) =...

Question

Question

After-tax cost of debt.
Given the following:

Yield to maturity (Before tax cost of debt) = 12%
Tax Rate = 40%

Please calculate the after-tax cost of debt.

business finance

Answer 1

Answer #1

after-tax cost of debt=Yield to maturity*(1-tax rate)

=12*(1-0.4)

which is equal to

=7.2%

Answer 2

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