Lewis, Schultz, and Nobel Development Corp. has an after-tax cost of debt of 4.5%. With a tax rate of 21%, what is the yield on the debt?
A) 4.5%
B) 9.0%
C) 1.89%
D) 5.70%

Name: Lewis, Schultz, and Nobel Development Corp. has an after-tax cost of debt of 4.5%. With a tax rate of 21%, what is the yield on the debt? A) 4.5% B) 9.0% C) 1.89% D) 5.70%
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K_d = Yield(1 − tax rate) 4.5% = Yield (1 − 0.21) Yield = 5.70%