A business in the 45% tax bracket is considering borrowing money at 10%. a. What is the

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A business in the 45% tax bracket is considering borrowing money at 10%.

a. What is the after-tax interest rate on the debt?

b. What is the after-tax interest rate if only half of the interest expense is allowed as a tax deduction?

c. Would your answer change if the firm is losing money now and does not expect to have taxable income for three years?

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Applied Corporate Finance

ISBN: 978-1118808931

4th edition

Authors: Aswath Damodaran

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Question Posted: Apr 15, 2015 09:06 AM

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A business in the 45% tax bracket is considering borrowing money at 10%. a. What is the

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a Aftertax interest rate 10 145 550 b If only half the interest is allowed 10 12...View the full answer

Applied Corporate Finance

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