What coupon rate is being paid on debt for a firm with an after-tax cost of debt of 7.5% and a tax rate of 40%?
A) 10.5%
B) 12.0%
C) 12.5%
D) 18.75% 7.50% = before-tax cost x (1 - tax rate)
7) 50% = before-tax cost x .60
Correct Answer:
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