The After-Tax Cost of Debt for Purposes of Estimating a Company's

Multiple Choice

The after-tax cost of debt for purposes of estimating a company's weighted-average cost of capital (WACC)

A) Requires an estimate of the yield-to-maturity for long-term bonds.
B) Is equal to the pretax cost of debt times t, where t = income tax rate.
C) Is equal to the pretax cost of debt/(1 − t) , where t = income tax rate.
D) Is approximated by the firm's short-term borrowing rate.
E) Is estimated using the Capital Asset Pricing Model (CAPM) .