Answer:
6
Explanation:
Given that
Yield to maturity = 10%
Tax rate = 40%
According to the given scenario, the computation of firm's after-tax cost of debt is shown below:-
After-tax cost of debt = Yield to maturity × (1 - Tax rate)
= 10 × (1 - 0.4)
= 10 × 0.6
= 6
Therefore for computing the after-tax cost of debt we simply applied the above formula.
