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In the after cost of debt formula, what rate would you use for the cost of...

In the after cost of debt formula, what rate would you use for the cost of debt for a firm with 8% outstanding coupon bonds and a yield to maturity of 6.5%?

Select one:

a. 6.5%

b. 8.0%

c. 2.5%

d. 14.5%

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Answer #1

YTM IS THE CURRENT RATE APPLICABLE ON NEW ISSUES

SO CORRECT ANSWER = a : 6.5% (THUMBS UP PLEASE)

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