Approximate after-tax cost of debt for a new issue of bonds

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Reference no: EM13722909

1. The coupon rate on an issue of debt is 12%. The yield to maturity on this issue is 14%. The corporate tax rate is 31%. What would be the approximate after-tax cost of debt for a new issue of bonds?

4.34%

3.72%

9.66%

8.28%

2. The coupon rate on a debt issue is 12%. If the yield to maturity on the debt is 9.33%, what is the after-tax cost of debt in the weighted average cost of capital if the firm's tax rate is 34%?

3.17%

4.08%

6.16%

7.92%

Reference no: EM13722909

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