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.© BrainMass Inc. brainmass.com June 3, 2020, 7:40 pm ad1c9bdddf
After tax cost of debt = Interest rate*(1-Tax rate)
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.