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Martin is offered an investment where for $4,500 today, he will receive $4,680 in one year. He decides to borrow $4,500 from the bank to
Martin is offered an investment where for $4,500 today, he will receive $4,680 in one year. He decides to borrow $4,500 from the bank to make this investment. What is the maximum interest rate the bank needs to offer on the loan if Martin is at least to break even on this investment? A. 4% B. 2% C. 5% D. 3% A firm has outstanding debt with a coupon rate of 8%, seven years maturity, and a price of $1000 per $1000 face value. What is the after-tax cost of debt if the marginal tax rate of the firm is 35%? A. 6% OB. 5.7% O C. 5.5% OD. 5.2%
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