If Pre tax cost of Debt is 15% and tax rate is 30%. Then what will be post tax cost of debt ?Answer area12%4.5%10.5%7.5%
Question
If Pre tax cost of Debt is 15% and tax rate is 30%. Then what will be post tax cost of debt ?
Answer area
- 12%
- 4.5%
- 10.5%
- 7.5%
Solution
The post-tax cost of debt can be calculated using the formula:
Post-tax cost of debt = Pre-tax cost of debt * (1 - Tax rate)
Given that the pre-tax cost of debt is 15% and the tax rate is 30%, we can substitute these values into the formula:
Post-tax cost of debt = 15% * (1 - 30%)
This simplifie
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