Question
Laurel, Inc., has debt outstanding with a coupon rate of 5.9 % and a yield to maturity of 6.9 % . Its tax rate is
Laurel, Inc., has debt outstanding with a coupon rate of 5.9 % and a yield to maturity of 6.9 % . Its tax rate is 40 % . What is Laurel's effective (after-tax) cost of debt?
NOTE: Assume that the debt has annual coupons.
Note: Assume that the firm will always be able to utilize its full interest tax shield.
The effective after-tax cost of debt is ____________%. (Round to four decimal places.)
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Multinational Business Finance
Authors: David K. Eiteman, Arthur I. Stonehill, Michael H. Moffett
6th Edition
0201538997, 978-0201538991
