1. Tobin's Barbeque has a bank loan at 9% interest and an after-tax cost of debt of 5%. What will the after-tax cost of debt be when the loan is due if a new loan is taken out yielding 11%. (Do not round intermediate calculations. Round your answer to 2 decimal places.)
6.11%, 11.16%, 3.56%, OR none of these
2. Which of the following statement related to interest rates is correct?
A. Annual interest rates consider the effect of interest earned on reinvested interest payments.
B. When comparing loans, you should compare the effective annual rates.
C. Lenders are required by law to disclose the annual interest rate of a loan to prospective borrowers.
D. Annual and effective interest rates are equal when interest is compounded monthly.