FIN MCQ
FIN303
After-tax cost of debt financing A recent leveraged buyout was financed with $50M. This amount comprised of partner's equity capital of $12M, $20M unsecured debt borrowed at 7% from one bank and the remainder from another bank at 8.5%. What is the overall after-tax cost of the debt financing if you expect the firm's tax rate to be 33%?
After-tax cost of debt financing A recent leveraged buyout was financed with $50M. This amount comprised of partner's equity capital of $12M, $20M unsecured debt borrowed at 7% from one bank and the remainder from another bank at 8.5%. What is the overall after-tax cost of the debt financing if you expect the firm's tax rate to be 33%?
After-tax cost of debt financing A recent leveraged buyout was financed with $50M. This amount comprised of partner's equity capital of $12M, $20M unsecured debt borrowed at 7% from one bank and the remainder from another bank at 8.5%. What is the overall after-tax cost of the debt financing if you expect the firm's tax rate to be 33%?
A) 2.55%
B) 3.34%
C) 5.17%
D) 7.71%
Answer: C
Learn More :
If the answers is incorrect or not given, you can answer the above question in the comment box. If the answers is incorrect or not given, you can answer the above question in the comment box.