question archive The coupon rate on a debt issue is 7%
The coupon rate on a debt issue is 7%
Subject:FinancePrice:2.87 Bought7
| The coupon rate on a debt issue is 7%. If the yield to maturity on the debt is 11%, what is the after-tax cost of debt in the weighted average cost of capital if the firm's tax rate is 41%? (Round your answer to 2 decimal places.) |
5.14%
7.84%
6.49%
8.64%
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Answer:
| 6.49% |
| YTM is 11% |
| Tax Rate 41% |
| After Tax Cost of debt = 11%(1-.41) |
| After Tax Cost of debt = 6.49% |
