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The Approximate Aftertax Cost of Debt for a 20-Year, 7

Question 128

Multiple Choice

The approximate aftertax cost of debt for a 20-year, 7 percent, $1,000 par value bond selling at $960(assume a marginal tax rate of 40 percent) is

A) 5.2 percent.
B) 7.3 percent.
C) 4.4 percent.
D) 7 percent.

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