Question: There are two bonds, one is a 4% coupon bond issued by General Motors, and the other is a 4.346% coupon bond issued by Ford.

There are two bonds, one is a 4% coupon bond issued by General Motors, and the other is a 4.346% coupon bond issued by Ford.

YTM

GM 5.832%

Ford 4.352%

What is the after-tax cost of debt for Ford given its effective tax rate for 2018 was 15%?

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