Question
Lowells Inc plans to issue a $1,000 par value, 20-year noncallable bond at a yield of 5%. The company's marginal tax rate is 30.00%, but
Lowells Inc plans to issue a $1,000 par value, 20-year noncallable bond at a yield of 5%. The company's marginal tax rate is 30.00%, but Congress is considering a change in the corporate tax rate to 20.00%. By how much would the component cost of debt used to calculate the WACC change if the new tax rate was adopted?
| 0.5% | ||
| -0.5% | ||
| 0.6% | ||
| -0.6% |
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Real Estate Investment Strategies Structures Decisions
Authors: David Hartzell, Andrew E. Baum
2nd Edition
1119526094, 978-1119526094
