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    After tax cost of debt

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    The Heuser Company's currently outstanding bonds have a 10% coupon and a 12% yield to maturity. Heuser believes it could issue new bonds at par that would provide a similar yield to maturity. It its marginal tax rate is 35%, what is Heuser's after tax cost of debt?

    After tax cost of debt = interest rate - tax savings

    After tax cost of debt = rd - rdT

    After tax cost of debt = rd(1-T)

    I used 10%(1-.35) = after tax cost of debt = 7%

    Is this answer correct?

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    https://brainmass.com/economics/personal-finance-savings/after-tax-cost-of-debt-problem-298200

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    The Heuser Company's currently outstanding bonds have a 10% coupon and a 12% yield to maturity. Heuser believes it could ...

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    Response helps in estimating After tax cost of debt

    $2.49

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