Question
Suppose a company's capital structure includes a debt with maturity of 10 years and marginal tax rate of 40%. If the company's rating is AAA
Suppose a company's capital structure includes a debt with maturity of 10 years and marginal tax rate of 40%. If the company's rating is AAA and the yield on the debt with the same similar debt rating is 5%, the company's before tax cost of debt is 5%. Calculate the after tax cost of debt
Step by Step Solution
There are 3 Steps involved in it
Step: 1
The aftertax cost of debt can be calculated using the formula After tax Cost of DebtBefo...
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Step: 2
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Microeconomics An Intuitive Approach with Calculus
Authors: Thomas Nechyba
1st edition
538453257, 978-0538453257
