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

Question 55

Multiple Choice

The approximate after-tax 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) 4.41 percent.
B) 5.15 percent.
C) 7 percent.
D) 7.35 percent.

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