A company plans to issue a $1,000 par value, 11-year noncallable bond with a 15% annual coupon, paid semiannually. The company's marginal tax rate is 41%, but there is legislation that is considering a change in the corporate tax rate to 19%. By how much (in percent) would the component cost of debt used to calculate the WACC change if the new tax rate was adopted?

Answer rating: 100% (QA)

The component cost of debt aftertax is the interest expense on the bond divided by the face value of ... View the full answer