Solved: Problem related to after tax cost of debt, Finance Basics

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Problem related to after tax cost of debt

Question 1: "What is the after tax cost of debt on a $500,000 loan given a 7% interest rate and 35% tax bracket?"

Question 2: You are considering a new investment. The rate on T-bills is 3.3% and the return on the S&P 500 is 10.5%. You have measured the non-diversifiable risk of the investment you are considering to be .7. What rate of return will you require on the investment?

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Finance Basics: Problem related to after tax cost of debt

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