TBQ has a market capitalization of $10 million, and $2.5 million in outstanding debt. Suppose their beta is 1.20, the risk-free rate is 2%, and the expected return of the market is 8%. TBQ’s debt cost of capital is 6% and their corporate tax rate is 40%. What is the after-tax debt cost of capital?

Answer rating: 100% (QA)

To calculate the aftertax debt cost of capital you can use the formula Aftertax Debt Co... View the full answer