Telecom Systems can issue debt yielding 8 percent. The company is in a 35 percent bracket. What...

Question:

Telecom Systems can issue debt yielding 8 percent. The company is in a 35 percent bracket. What is its after-tax cost of debt?

Cost of Debt:

The cost of debt refers to the cost that is associated with debt sources of finances. In the capital structure of a firm, there are various sources of capital. These sources of capital have their associated costs. The weighted average cost of capital represents the cost of raising capital.

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Financial Policy & the Cost of Capital

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Chapter 14 / Lesson 2
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In this lesson, we'll be learning about financial policy and the cost of capital. A financial policy is very important to any company, and it helps to drive the decisions alongside the cost of capital.


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