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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 37%. The firm's bonds pay interest semiannually with a 5.2% coupon rate and have a maturity of 9 years. If the annual yield to maturity of the bonds is 8.65%, what is the after tax cost of debt for this firm?

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Financial Management, Finance

Category:- Financial Management
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