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    Calculating the after-tax cost of debt for a business

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    Calculate the after-tax cost of debt for the Wallace Clinic, a for-profit healthcare provider, assuming that the coupon rate set on its debt is 11 percent and its tax rate is either:

    a. 0 percent
    b. 20 percent
    c. 40 percent

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    Solution Preview

    a. 0 percent

    Tax Rate=T=0%
    Cost of debt=rd=11%

    After tax cost of ...

    Solution Summary

    Solution describes the steps to calculate the after tax cost of debt in the given cases.