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A firm s pre - tax cost of debt is equal to the average coupon rate on all of the firm s outstanding bonds. can

A firm

s pre

-

tax cost of debt

is equal to the average coupon rate on all of the firm

s outstanding bonds.

can be estimated from the yield to maturity of the firm

s outstanding bonds.

is multiplied by the firm

s tax rate to get the after

-

tax cost of debt.

is equal to the coupon rate on the latest bonds issued by the firm.

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