If a company's after-tax cost of borrowing is 4.9% and its tax rate is 30%, then the company's before-tax cost of borrowing is 7%

Name: If a company's after-tax cost of borrowing is 4.9% and its tax rate is 30%, then the company's before-tax cost of borrowing is 7%
Brand: Quizplus
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Question

Quizplus · Accepted Answer

The after-tax cost of borrowing is calculated as the before-tax cost multiplied by (1 - tax rate). Solving 4.9% = 7% * (1 - 0.30) confirms the before-tax cost is 7%.

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