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Cost of equity 16 before tax cost of debt 13 marginal tax rate 40 stock sells at book value what is the after tax weighted average cost of capital?

Asked in Personal Finance & Tax at 6:08 PM on October 23, 2008

Tags: cost, equity, cost, debt, marginal, rate

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shivaram
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I have just started taking finance class in college. I found the formula to this equation on wikipedia. Did i win anything?

After tax cost of debt formula before tax rate x (1 - marginal tax)

Therefore:

13% x (1 - 40%) = .078 > 7.8%

Answered by Arvind Pal , an ibibo Master, at 6:18 PM on October 23, 2008

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Arvind Pal
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