Suppose you are trying to estimate the after tax cost of debt for a firm as part of the calculation of the Weighted Average Cost of Capital (WACC). The corporate tax rate for this firm is 32%. The firm's bonds pay interest semiannually with a 6.9% coupon rate and have a maturity of 14 years. If the annual yield to maturity of the bonds is 6.61%, what is the after tax cost of debt for this firm? 

Answer rating: 100% (QA)

Heres how to calculate the aftertax cost of debt for the firm ... View the full answer