The cost of debt is determined by taking the - 4705

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The cost of debt is determined by taking the 

A) present value of the interest payments and principal times one minus the tax rate. 

B) historical yield on bonds times one minus the tax rate 

C) estimated yield on new bond issues of the same risk times one minus the shareholder marginal tax rate. 

D) none of the above 

 

Answer: D Difficulty: Medium Type: Conceptual 

 
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