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What is its after tax cost of debt

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Question - London Drug's cost of debt is 6%. The risk-free rate of interest is 2.5%. The expected return on the market portfolio is 7%. After effective taxes, London Drugs's effective tax rate is 30%. Its optimal capital structure is 40% debt and 60% equity. If London Drug's beta is estimated at 1.3, what is its after tax cost of debt?

Reference no: EM133077477

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