The before-tax cost of debt for a firm which has a 40 percent marginal tax rate is 12 percent. The after-tax cost of debt is
A. 4.8 percent.
B. 6.0 percent.
C. 7.2 percent.
D. 12 percent.
Answer:C
The before-tax cost of debt for a firm which has a 40 percent marginal tax rate is 12 percent. The after-tax cost of debt is
A. 4.8 percent. B. 6.0 percent. C. 7.2 percent. D. 12 percent.