Question: Lowells Inc plans to issue a $1,000 par value, 20-year noncallable bond at a yield of 5%. The company's marginal tax rate is 30.00%, but

Lowells Inc plans to issue a $1,000 par value, 20-year noncallable bond at a yield of 5%. The company's marginal tax rate is 30.00%, but Congress is considering a change in the corporate tax rate to 20.00%. By how much would the component cost of debt used to calculate the WACC change if the new tax rate was adopted?

(NOTE: Not asking how much WACC will change, the answer should be how much will Cost of Debt change)

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