Question 1: What is the after tax cost of debt on a $345000 loan given a 9% interest rate and 28% tax bracket?
- 8.9%
- $22,356
- 6.48%
- $36,000
Question 2: Brown Street Grocers has a cost of equity of 10.68 percent, a pre-tax cost of debt of 5.4 percent, and a tax rate of 33 percent. What is the firm's weighted average cost of capital if the debt-equity ratio is 0.6?
- 7.24 percent
- 8.03 percent
- 9.65 percent
- 11.60 percent
- 9.25 percent