What is the after tax cost of debt on a $500,000 loan given an 8% interest...

Question

Question

What is the after tax cost of debt on a $500,000 loan given an 8% interest rate and 35% tax bracket?

Group of answer choices

5.20%

2.80%

$26,000

$40,000

business finance

Answer 1

Answer #1

A. 5.20%

After tax cost of debt = Pretax cost of debt(1- Tax)

After tax cost of debt = 0.08(1 - 0.35)

After tax cost of debt = 0.0520 or 5.20%

Answer 2

Similar Homework Help Questions

2. The after tax cost of debt on a 9% $200,000 loan given a 30% tax...

2. The after tax cost of debt on a 9% $200,000 loan given a 30% tax bracket would be: A) 9% B) 6.3% C) 5% D) 4%
Tobin's Barbeque has a bank loan at 12% interest and an after-tax cost of debt of...

Tobin's Barbeque has a bank loan at 12% interest and an after-tax cost of debt of 6%. What will the after-tax cost of debt be when the loan is due if a new loan is taken out yielding 12%. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Multiple Choice О. None of these options are true О о о Multiple Choice None of these options are true. боож, 6.00% оооо птови, 345%
This Question: 1 pt This Test: 50 pts possible Betore-tax cost of debt and after-tax cost...

This Question: 1 pt This Test: 50 pts possible Betore-tax cost of debt and after-tax cost of debt David Abbot i bank, and to repay the koan he will make 360 monthly payments (principal and interest) of $1,161.11 per month over the next 30 years. David can s buying a new house, and he is taking out a 30-year mortgage. David will borrow $209,000 from a payments on his mortgage from his taxable income, and a. What is the before-tax...

What is the After Tax Cost of Debt for a firm if the market rate for...

What is the After Tax Cost of Debt for a firm if the market rate for its debt is 11% and it is in the 25% tax bracket.
If the after-tax cost of debt for Apple is 10%, what is the pretax cost if...

If the after-tax cost of debt for Apple is 10%, what is the pretax cost if they are in the 30% tax bracket?
After-tax cost of debt. Given the following: Yield to maturity (Before tax cost of debt) =...

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.

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

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% 7.2% O 10.5% 15.6%
PROBLEMS 11. (After-tax COST O CARTAL 210 After-tax cost of debt Calculate the after-tax c ode...

PROBLEMS 11. (After-tax COST O CARTAL 210 After-tax cost of debt Calculate the after-tax c ode under each of the following con A tax rate of 37, and a yield to maturity of 754 b. A tax rate 125, and a pre-tax cost of debt of 102 A tax rate of O, and a yield to maturity of 79 After-tax cost of debt) Melbourne, Inc. currently has 3 bonds with a to maturity of in the 35% marginal tax rate,...
What is the after-tax cost of debt for a firm in the 30% tax bracket that...

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%

The after tax cost of debt is the interest rate that a firm pays on any...

The after tax cost of debt is the interest rate that a firm pays on any new debt financing. Water and Power Company (WPC) can borrow funds at an interest rate of 12.50% for a period of eight years. Its marginal federal-plus-state tax rate is 25%. WPC's after-tax cost of debt is (rounded to two decimal places). At the present time, Water and Power Company (WPC) has 5-year noncallable bonds with a face value of $1,000 that are outstanding. These...