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Cost of Capital

"What is the after tax cost of debt on a $500,000 loan given a 7% interest rate and 35% tax bracket?"
Answer
"$22,750 "
2.45%
4.55%
"$35,000

You are considering a new investment. The rate on T-bills is 3.3% and the return on the S&P 500 is 10.5%. You have measured the non-diversifiable risk of the investment you are considering to be .7. What rate of return will you require on the investment?
Answer
5.04%
5.28%
8.34%
13.80%
2.35%

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"What is the after tax cost of debt on a $500,000 loan given a 7% interest rate and 35% tax bracket?"
After tax cost of ...

Solution Summary

Solution determines the most appropriate option in the given cases.

$2.19