What Is the Pretax Cost of Debt for a Firm

question 58

Multiple Choice

What is the pretax cost of debt for a firm in the 35% tax bracket that has a 9% after-tax cost of debt?

• A)5.85%
• B)12.15%
• C)13.85%
• D)25.71%

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Definitions:

Supreme Court

The highest judicial body in the United States, consisting of nine Justices who interpret the Constitution, review laws, and decide on cases of national importance.

Nationalist Chinese

Refers to the supporters and members of the Kuomintang (KMT), the nationalist party in China that fought against the Chinese Communist Party before and during the Chinese Civil War, eventually retreating to Taiwan.

China

A country in East Asia, the world's most populous nation, with a rich history, diverse culture, and rapidly growing economy.

American Conferees

Individuals from the United States who participate in formal meetings or conferences, often concerning politics, academics, or industries.