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A company can borrow money from a bank at an 8% interest rate. It has a Beta of 0.6. The average stock in the market

A company can borrow money from a bank at an 8% interest rate.

It has a Beta of 0.6.

The average stock in the market is expected to return 10% this year.

The risk free rate is 3%.

The company pays an average tax rate of 30%.

The company uses 40% debt.

Calculate the company's after-tax cost of debt.

ANSWERS:

2.24%

5.60%

8.00%

3.92%

3.20%

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