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What the after tax cost of debt

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Question - Jones Ltd borrowed funds at an interest rate of 10%. The debentures were $100 at par issue debentures for 5 years with interest paid annually. Jones Ltd pays tax at the rate of 30%. The current market value of the debentures is $96.00 and will mature in 2 years time at par. What the after tax cost of debt?

a. 10.00%

b. 7.00%

c. 8.67%

d. 12.38%

Reference no: EM133025698

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