Calculate the after-tax cost of debt
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Calculate the after-tax cost of debt under each of the following conditions;
A. Interest rate, 13 percent; tax rate, 0 percent
B. Interest rate, 13 percent; tax rate, 20 percent
C. Interest rate, 13 percent; tax rate, 35 percent.
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Solution Summary
The solution provides simple, easy to understand calculations to find after tax cost of debt for each other the conditions. One reference is provided to enhance student learning.
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Theory:
After tax cost of debt = Interest rate*(1-Tax rate)
a) ...
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