Calculate the after$-$tax cost of debt for the Wallace Clinic, a for$-$profit healthcare provider, assuming that the coupon rate set on its debt is $11$ percent and its tax rate is:

a$.0$ percent

b$.20$ percent

c$.30$ pereent

ANSWER

Formula:

After tax cost of debt$=R(R^{{?}^{{?}^{?}}}d)(1-T)$

a$.11\mathrm{.}00\%$

b$.8\mathrm{.}80\%$

c$.,7\mathrm{.}70\%$

Spreadsheet solution:

BT

$T=0$

$T=20$

$T=30$

AT $(0)$

AT $(20)$

AT $(40)$