Calculate the effective interest rate and the cost of debt

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Question - Company E has a EUR 60,000 loan with a 4% interest rate, another EUR 20,000 loan with 2,5% interest rate and pays a 1% coupon on a bond with a nominal of EUR 100,000. The company pays a 30% corporate tax rate. Interest on the 3 debt instruments are annual. Calculate the effective interest rate and the cost of debt for the company after tax.

Reference no: EM133118814

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