Which of the following is the proper way to adjust the cost of debt to estimate the after-tax cost of debt? A) R_d ÷ (1+T_c) B) R_d ÷ (1-T_c) C) R_d × (1-T_c) D) R_d × (1+T_c)

Question

Quizplus · Accepted Answer

The after-tax cost of debt is calculated by multiplying the cost of debt (R_d) by (1-T_c), where T_c is the corporate tax rate. This accounts for the tax shield provided by interest expenses.

Which of the Following Is the Proper Way to Adjust