Calculate WACC change if the new tax rate was adopted

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Reference no: EM131537051

Keys Printing plans to issue a $1,000 par value, 20-year noncallable bond with a 7.00% annual coupon, paid semiannually. The company's marginal tax rate is 40.00%, but Congress is considering a change in the corporate tax rate to 45.00%. By how much would the component cost of debt used to calculate the WACC change if the new tax rate was adopted?

a. –0.42%

b. –0.36%

c. –0.30%

d. –0.35%

e. –0.44%

Reference no: EM131537051

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