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Tobins bbq has a bank loan at 8 interest and an after-tax

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Tobin's BBQ has a bank loan at 8% interest and an after-tax cost of debt of 6%. What will the after-tax cost of debt be when the loan is due if a new loan is taken out yielding 11%? I see the correct answer but how do you know the tax rate is 2/8?

Reference no: EM13616444

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