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The Coupon Rate on an Issue of Debt Is 8

Question 90

Multiple Choice

The coupon rate on an issue of debt is 8%. The yield to maturity on this issue is 10%. The corporate tax rate is 21%. What would be the approximate after-tax cost of debt for a new issue of bonds?


A) 5.28%
B) 2.48%
C) 7.9%
D) 3.14%

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