Calculate the after-tax cost of debt under each of the following conditions: a. Interest rate,...
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Finance
Calculate the after-tax cost of debt under each of the following conditions:
a. Interest rate, 9 percent; tax rate, 0 percent.
b. Interest rate, 9 percent; tax rate, 10 percent.
c. Interest rate, 9percent; tax rate, 20 percent.
Explain why one would use the after-tax cost of debt (as opposed to the actual cost of debt financing) when calculating the viability of a capital investment?
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