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20 year debt issued a year ago par value coupon rate 8 percent paid annually Today the debt is selling for 1050 The firm's tax bracket is 35 percent what is it after tax cost of debt?
Wiki User
∙ 15y ago
From your query i just got to know that you want the figure of tax percentage on your debt.
I think you should concern some financial companies which would provide you more clear idea regrading your question.
Today the companies are emerging with great schemes with low interests and for bad credits.
Wiki User
∙ 15y ago
To calculate the after-tax cost of debt, we need to consider the tax savings from the interest payments. First, calculate the tax shield by multiplying the coupon rate (8%) by the tax rate (35%): 8% * 35% = 2.8%. Next, subtract the tax shield from the coupon rate to get the after-tax cost of debt: 8% - 2.8% = 5.2%. Therefore, the after-tax cost of debt is 5.2%.
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