alleryStart learning →Rf 6%, credit risk rate 4%, tax 30%: after-tax cost of debt
A6%
B7%
C8.4%
D10%
Answer & Solution
Correct answer: B. 7%
Kd = (6 + 4) x (1 - 0.30) = 7%.
Keep practising Cost of Capital Basics
Browse all Cost of Capital Basics questions for CA Inter, or explore more Financial Management topics.
Related questions
If the tax rate rises, other things equal, after-tax Kd willShareholders are rewarded with dividends andIf a firm's risk rises, its cost of capitalA firm's current cost of equity, unlike its cost of debt, isThe quality of accounting information can affect a firm'sWACC needs the costs of debt, equity andA schedule of cost per rupee of new capital against amount raised is theA marginal cost of capital schedule first ranks projects by