Lewis, Schultz, and Nobel Development Corp

question 101

Multiple Choice

Lewis, Schultz, and Nobel Development Corp. has an after-tax cost of debt of 4.5%. With a tax rate of 30%, what is the yield on the debt?

• A) 4.5%
• B) 9.0%
• C) 1.89%
• D) 6.43%

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Definitions:

Investment

Investment refers to the allocation of resources, typically financial, in assets or projects with the expectation of earning a return.

Target Cost

The maximum amount that can be spent on a product while still earning the desired profit margin, usually determined during the design and development stages.

Investment

Assigning financial resources with the aim of achieving returns or making a profit.

Desired Return

The target profit or income level that an investor or business aims to achieve on an investment or project.