The after tax cost of debt on a 6% $50,000 loan given a 35% tax bracket would be:
A) 0.039%
B) 6%
C) 3.9%
D) 4%

Name: The after tax cost of debt on a 6% $50,000 loan given a 35% tax bracket would be: A) 0.039% B) 6% C) 3.9% D) 4%
Brand: Quizplus
Rating: 4.7 (29 reviews)

Question

Quizplus · Accepted Answer

The after-tax cost of debt is calculated as the interest rate on the debt multiplied by (1 - tax rate). For a 6% loan and a 35% tax bracket, it's 6% * (1 - 0.35) = 6% * 0.65 = 3.9%.

The After Tax Cost of Debt on a 6% $50,000