Mathematics · Cost of Capital
A company raised debt of Rs. 50 lakhs on terms that interest is payable at prime lending rate plus 3%. If the prime lending rate is 7% and the corporate tax rate is 35%, what is the after-tax cost of debt (Kd)?
- 16.4%
- 25.5%
- 310.0%
- 46.5%✓
Correct answer
6.5%
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