The Coupon Rate on a Debt Issue Is 13

question 8

Multiple Choice

The coupon rate on a debt issue is 13%.If the yield to maturity on the debt is 10%,what is the after tax cost of debt (for a cost of capital calculation) if the firm's tax rate is 34%?

• A) 4.42%
• B) 3.00%
• C) 8.58%
• D) 6.60%

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