The after-tax cost of debt for a firm in the 35% tax bracket with a before-tax cost of debt of 6% is:

Name: The after-tax cost of debt for a firm in the 35% tax bracket with a before-tax cost of debt of 6% is:
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Question

Quizplus · Accepted Answer

The after-tax cost of debt can be calculated as:
After-tax cost of debt = (1 - Tax rate) x Before-tax cost of debt

Substituting the values:
After-tax cost of debt = (1 - 0.35) x 6% = 3.9%

Therefore, the answer is C.

The After-Tax Cost of Debt for a Firm in the 35