The cash flow plan associated with a debt financing transaction allowed a company to receive $2,800,000 now

Question:

The cash flow plan associated with a debt financing transaction allowed a company to receive $2,800,000 now in lieu of future interest payments of $196,000 per year for 10 years plus a lump sum of $2,800,000 in year 10. If the company's effective tax rate is 33%, determine the company's cost of debt capital

(a) Before taxes

(b) After taxes.

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...