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A Firm Has Outstanding Debt with a Coupon Rate of 7%,seven

Question 94

Multiple Choice

A firm has outstanding debt with a coupon rate of 7%,seven years maturity,and a price of $1000 per $1000 face value.What is the after-tax cost of debt if the marginal tax rate of the firm is 30%?


A) 4.9%
B) 5.2%
C) 5.5%
D) 5.9%
E) 6.3%

Correct Answer:

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