What will the after-tax cost of debt be


Tobin's BBQ has a bank loan at 8% interest and an after-tax cost of debt of 6%. What will the after-tax cost of debt be when the loan is due if a new loan is taken out yielding 11%? I see the correct answer but how do you know the tax rate is 2/8?

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Finance Basics: What will the after-tax cost of debt be
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