For Russell Container Company, described in the previous problem, assume the yield on the bonds goes up

Question:

For Russell Container Company, described in the previous problem, assume the yield on the bonds goes up by one percentage point and that the tax rate is now 34 percent.
a. What is the new aftertax cost of debt?
b. Has the aftertax cost of debt gone up or down from the previous problem? Explain why.

Cost Of Debt
The cost of debt is the effective interest rate a company pays on its debts. It’s the cost of debt, such as bonds and loans, among others. The cost of debt often refers to before-tax cost of debt, which is the company's cost of debt before taking...

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