The coupon rate on a debt issue is 6%. If the yield to maturity on the debt is 9%, what is the after-tax cost of debt in the weighted average cost of capital if the firm's tax rate is 21%?
A) 3.96%
B) 4.08%
C) 7.11%
D) 7.92%

Name: The coupon rate on a debt issue is 6%. If the yield to maturity on the debt is 9%, what is the after-tax cost of debt in the weighted average cost of capital if the firm's tax rate is 21%? A) 3.96% B) 4.08% C) 7.11% D) 7.92%
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Question

Quizplus · Accepted Answer

K_d = 9%(1 − 0.21) = 7.11%

The Coupon Rate on a Debt Issue Is 6