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    Mreyes79's Avatar
    Mreyes79 Posts: 1, Reputation: 1
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    #1

    May 24, 2007, 07:57 AM
    Cost of debt
    JB Inc. has $5million of outstanding debt with a coupon rate of 12%. Current yield to maturity is 14%. If the firm's tax rate is 40%, what is the cost of debt for JB?
    bunnyKutty's Avatar
    bunnyKutty Posts: 60, Reputation: 5
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    #2

    Sep 28, 2009, 06:14 AM

    Yield to maturity = 14%
    After-tax cost of debt = 14% (1 - 40%)
    = 8.4%
    morgaine300's Avatar
    morgaine300 Posts: 6,561, Reputation: 276
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    #3

    Sep 29, 2009, 12:04 AM

    Sigh.
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